Commenting on the launch of the ResPublica Report 'Markets for the Many: how civic finance can open up markets and widen access' Robin Fieth, Chief Executive of the Building Societies Association, said:
"The BSA welcomes this independent report as a timely contribution to debate over the future of the UK financial services sector. The focus of attention in recent years has been on safeguarding the financial system against the spectre of future crises. It is now time for the public debate to turn towards shaping the provision of financial services for the next twenty years.
“Building societies exist to serve their members. They operate a simple and effective model of funding mortgages to members with the savings members deposit with them. This is a virtuous circle which has enabled people to buy their own homes. Many individuals would find it more difficult to access a home loan through the computerised assessment and de-personalised systems of the large banks.
"This Report raises some important questions for the building society sector, government and regulators alike, but the promises already made by the Government and the Opposition to promote diversity in financial services must amount to more than gesture politics.
"The BSA entirely supports the call for regulation appropriate to the mutual model. There needs to be a greater understanding amongst regulators that a one size fits all approach to financial services simply does not work if we want a genuinely diverse financial services sector.
"For over two hundred years building societies have evolved and adapted to meet the changing needs of society. This is shown in the way that they weathered the financial crisis and in the important role they continue to play in rebuilding the economy after the 2008 credit crisis.
“The Report recommends that changes are made to the rules within which building societies operate so that they can lend a higher proportion of their funds to SMEs. The objective to widen the sources of SME finance is understandable, but building societies are not the panacea to restoring SME lending. Many societies already provide services to small businesses and redrawing the limits of what societies can lend will not of itself create large scale financing. The BSA believes that decisions relating to business lending activities are best taken by individual societies taking into account their own expertise, strategy and crucially the benefits to their members.
"There is no doubt that the past conversion of many of the largest building societies into plc banks is something widely regretted. The Report calls for changes in the law to make it easier for mutuals to acquire high street banks and for the conversion of non-mutuals into building societies. The BSA contributed to the debate over the disposal of the Northern Rock Bank and advocated that it be remutualised to boost diversity and competition in the banking sector. The BSA does not currently see any realistic prospect for the building societies sector to acquire large high street banks.
"This Report and the Parliamentary event to mark its publication provide a springboard from which to launch a renewed and energetic debate about the future of building societies. We will have a strong voice in this dialogue to develop a policy environment in which mutuals will thrive.”