New Rules For Building Societies

More property market news from the UK from Dibben and Dibben as Building societies say that the planned new regulations will make it very difficult for them to compete with the major high street banks. The proposals from the Financial Services Authority, the City watchdog, include plans to limit and restrict the riskier types of lending by building societies. These could include high loan-to-value mortgages for borrowers with very small deposits and even the buy-to-let mortgages.

The Building Societies Association (BSA) says that the proposals would disadvantage and damage the industry. The BSA has made a formal submission to the FSA following a consultation period on the proposals. Building societies hold 20% of retail bank deposits and have a share of more than 20% of the mortgage market.

The FSA also wants societies to have senior managers who are sufficiently skilled to oversee any riskier lending. The plan follows in the wake of the collapse of the Dunfermline building society and the forced rescue of several other societies last year.

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