Detail of outcome
The outcome of this consultation was reported in the government’s wider response on banking reform. The final position for building societies on ring-fencing, as well as a number of further legislative changes recommended by consultees, was brought into law by the Financial Services (Banking Reform) Act, which received Royal Assent in December 2013.
Setting out the government’s aim to maintain the distinctiveness of the sector while creating a level playing field and removing unnecessary barriers to growth. It will amend the Building Societies Act to widen the opportunities for building societies and to align them with the ring fenced banks without compromising their mutuality and the pivotal role they play in supporting the aspirations of families. The loss-absorbency proposals will apply to building societies as they will for banks of a similar profile. More detail will be announced in due course.
Furthermore, the government is open to reviewing those parts of the Building Societies Act that the sector believes restrict them, where this is in accordance with maintaining their distinctiveness as part of its drive to foster diversity in the financial sector.
The government White Paper ‘Banking Reform: delivering stability and supporting a sustainable economy’, published on 14 June 2012, announced that the government would shortly publish a discussion document on the building societies sector, setting out the full detail of its proposals for building societies, and its aspirations for the sector.