Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Treasury to recommend building society shake-up

William Kay
Saturday 10 September 1994 18:02 EDT
Comments

Your support helps us to tell the story

From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.

At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.

The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.

Your support makes all the difference.

BUILDING societies face their biggest shake-up since the Building Societies Act was passed eight years ago. In the next fortnight, the Treasury is due to publish its long-awaited review, which is expected to be more radical than was first thought when it was announced last spring.

The review was prompted, at least in part, by Lloyds Bank's pounds 1.8bn takeover bid for the Cheltenham & Gloucester building society. This is going through legal hoops but has raised wider questions about how building societies should be managed and supervised.

The most startling recommendation in the Treasury review is expected to be a move to make it easier for savers to be nominated to the board of their society. At present, the directors can place a variety of hurdles in the way of a group of savers who want to put one of their number on the board.

This will be part of a move to wider accountability, which many societies see as a necessary sacrifice in return for greater financial freedom to compete with banks.

Peter Birch, chief executive of Abbey National, which has already converted from a building society into a bank, made a pre-emptive strike last week when he warned: 'Board members (of societies) may well feel comfortable as a mutual building society, but I believe they need to become more accountable to their members who are, after all, their owners - with little say.'

But a director of a leading society pointed out: 'The skills required to be a director of a large, complex financial organisation - which is what many societies have become - are more onerous every year. But we would want to avoid a two- tier board.'

The answer, he suggested, could be a form of halfway house, enabling lay people to become directors without having to get immersed in too much of the detail.

(Photograph omitted)

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in