The Building Societies Association (BSA) has backed a Private Members Bill introduced by Julie Elliott MP, aimed at updating the Building Societies Act 1986.
The bill seeks to level the banking sector’s competitive field by modernizing rules that currently restrict building societies’ lending abilities.
Under the existing legislation, societies are required to source at least half of their funding from individual and business savings deposits, limiting their lending to first-time buyers and business owners.
The proposed amendments to the Act will allow building societies to exclude certain wholesale funding types from their funding limits.
While the overall funding limit remains unchanged, the bill will remove key constraints, enhancing building societies’ capacity to offer more competitive mortgage loans, particularly to first-time buyers.
This bill, which has undergone extensive consultation and enjoys broad support across the building societies and mutuals sector, as well as bipartisan backing, is seen as a crucial step in updating outdated legislation.
Robin Fieth, chief executive of the BSA, commented on the introduction of the bill: “I would like to thank Julie Elliott MP for bringing forward this important piece of legislation to help to level the playing field between building societies and banks.
” Building societies provide a vital service to the communities they serve but are currently prevented from doing more by archaic legislation. The changes proposed in this Bill will help societies to help more people buy a new home and save for the future.”
The BSA sees this bill as pivotal in enabling building societies to more effectively fulfill their community roles and contribute positively to the housing market.
