FSAunder fire as building societies fight rules boost
CITY financial watchdog the Financial Services Authority (FSA) has come under fire from building societies over its proposals to clamp down on their ability to lend to consumers.
The lenders are understood to have teamed up and sent a fierce letter, through the Building Societies Association, to warn the FSA the rules will hamper their competitiveness.
The rules, derived in the wake of the credit crunch, would have a “discriminatory and anti-competitive effect in the mortgage market”, the letter is understood to say. “Our main overall concern is that much of the detail of the proposals simply fails to match the high-level objective that the FSA set itself – of promoting a strong, vibrant mutual sector.”
Many building societies have struggled due to the lack of available liquidity in the credit crunch, and the FSA rules proposals would force them to hoard more cash in future.
They would also place a cap on how much money building societies can lend to individuals, by forcing them to demand a high level of initial deposits before granting mortgages.
Building societies such as giant Nationwide are thought to be unhappy as they consider themselves to be well capitalised.
They say they would lose out unnecessarily on new business under the stricter regulatory environment.