The council, which oversees the work of Brian Murphy, the Ombudsman, claimed: "Clearly, the decision to convert is a commercial matter for individual building societies.
"But [we] believe that the continual contraction in the number of societies is a matter of regret and a development that is unlikely to benefit consumers."
Its view, argued in the Ombudsman's annual report yesterday, was described as "disgraceful" by Halifax Building Society, which is preparing its pounds 10bn flotation next year.
"It is outrageous that the council has seen fit to comment in this way on something which has nothing whatsoever to do with the Ombudsman's scheme," said Gary Marsh, a senior manager at the Halifax. "Their assertion is made without any evidence."
The Halifax's bitter defence of its flotation plans overshadowed Mr Murphy's annual report, which showed that the caseload of complaints dealt by his office rose by 93 per cent last year, to 2,081, out of more than 7,000 who contacted the Ombudsman. Almost 1,000 initial complaints were linked to the takeover of Cheltenham & Gloucester by Lloyds Bank.