Building societies halt subscriptions

Dispute prompts withdrawal from association
Click to follow
The Independent Online
Building societies seeking conversion have refused to pay subscriptions to their industry body, the Building Societies Association, beyond the year end.

The move is further evidence of disenchantment on the part of societies such as the Woolwich, Alliance & Leicester and the Halifax, over what they describe as the BSA's failure to represent their views to government on new building societies legislation.

A spokesman for the Woolwich said: "It is very unlikely we will continue to pay our sub beyond December. We had thought we would continue to pay the money until our conversion, set for July 1997." He said the society changed its mind after the BSA's failure to consult members over proposed new legislation.

The charges follow meetings between Treasury minister Angela Knight and Adrian Coles, director general of the BSA. She replied to a written question in Parliament, as to whether she had consulted the industry, that she had met the BSA, "which represents all building societies". Several societies, especially those seeking conversion, were incensed by the reply.

They claimed the legislation could force them to postpone or even abandon plans for flotation.

The BSA faces tumultuous changes in its role as its largest members leave the fold. The Halifax, Woolwich, Alliance & Leicester and Northern Rock all intend to convert. Bristol & West is set to be swallowed up by the Bank of Ireland.

The BSA has had to levy higher subscriptions on its remaining members, because of the shortfall in subscriptions it faces. Building societies pay their subscriptions on a sliding scale linked to the size of a society's assets. For example, the Halifax's dues would have been more than pounds 300,000; the Woolwich's about pounds 130,000.

Mr Coles said the association did not face any shortfall in its income. From January, it splits in two when the Council of Mortgage Lenders becomes a separately funded body. The remaining members have all agreed an increase in their contributions. As a result, the combined income of the BSA and the CML will remain at pounds 3.5m.

But the BSA will only represent some 20 per cent of mortgage lending in 1997, with the defectors representing about two-thirds of UK lending.

Among the remaining members with substantial mortgage portfolios, the Nationwide and the Bradford & Bingley are both widely touted as likely to opt for conversion some time next year.

Comments