Building societies should be more accountable, say banks

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The Independent Online
THE banking industry has warned the building society movement that the Treasury's recent extension of societies' powers must be matched by greater accountability.

Sir Nicholas Goodison, president of the British Bankers Association, said yesterday that, as the Treasury decided two weeks ago to allow societies to take on new borrowing and lending freedoms, they should be much more answerable to building society members.

'It seems unsatisfactory to us that organisations can have more freedom of operation and therefore expose themselves to more risk but with the same accountability to their owners,' he said.

The BBA issued its challenge against a background of increased competition between banks and building societies for the lucrative mortgage and life assurance markets, and concern over the proposed Lloyds Bank takeover of Cheltenham & Gloucester Building Society.

Sir Nicholas has said TSB would like to take over one of the top 10 largest building societies, provided the right candidate can be found and agree to a deal.

'The closer a mutual comes to a listed company, the closer the mutual's accountability should be that of a listed company,' he said.

Sir Nicholas said building society members did not receive the same level of protection given by plc status in receiving annual reports, being able to ask questions at annual meetings, voting to sack directors and being notified of deals.

Obtaining financial information by deceit and seeking to sell information obtained by deceit will be made a criminal offence by two amendments to the Criminal Justice Bill.

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