BUILDING society members are being treated unfairly under a scheme to compensate the victims of Britain’s failed banks, it is claimed.
Now building society savers and borrowers in Huddersfield have been urged to back calls for reform of the Financial Services Compensation Scheme, which protects people who have lost money due to bad financial advice.
Under the scheme, banks and building societies pay a levy to contribute to the compensation pot.
But the levy is based on the size of customer deposits held – which tend to be bigger in building societies – rather than the risk each institution poses to the financial system. More than 130 MPs – including Batley & Spen Labour MP Mike Wood – have signed a Commons motion condemning “the disproportionate impact” on building societies.
Andrew Cooper, leader of the Greens on Kirklees Council and the party’s prospective parliamentary candidate for Huddersfield said: “Building societies are being asked to pay an unreasonable share of this levy.
“ It is grossly unfair that institutions that behaved prudently in the housing market upswing are now being forced to pay for those who acted recklessly.
“Any additional costs applied to building societies ultimately works to the detriment of their members.
“There are many savers and borrowers in Kirklees who will object to bailing out the banks. There is a strong case for the allocation of the FSCS levies to be changed so that it reflects risk not just asset levels.”
Clr Cooper said: “Building societies are at the heart of the labour and co-operative movement’s history. We in the Green Party support them wholeheartedly and ask everyone who believes in mutuality to lobby their MP.”
The Commons motion said that building societies were set to pay about £200m over the next three years as their contribution to the scheme – a figure equal to about 15% of the mutual sector’s pre-tax profits for 2007-2008.
In the banking sector, the FSCS levy was below 5% .
