Regulation should be “both proportionate to the size and complexity of a financial services business and appropriate to its legal form”.
Disproportionate amounts of red tape and regulation is threatening the stability of smaller building societies, Robin Fieth has claimed.
In his opening address the Building Societies Association Annual Conference at The Sage, Gateshead today, the BSA chief executive said regulation should be “both proportionate to the size and complexity of a financial services business and appropriate to its legal form”.
He said: “Above all this year we have started to see a real and positive shift in perceptions about the vital role of building societies as part of a truly competitive and resilient 21st century UK financial services system.
“The government’s willingness to support the additional competition clause for regulators in the new Bank of England & Financial Services Act is evidence of this.
“But this is progress that we cannot allow to be threatened by a regulatory environment that sees a large society having to spend £45 per million of assets on the staff needed to implement new financial regulation and a small society ten times as much.
“These are factors that affect building societies as established challengers and the newer challenger banks too.
“Getting this right will deliver for consumers with increased innovation and competition, and for the UK as a whole through increased market resilience.”
He said the market "already has a lot of pieces of the jigsaw" but it’s not yet all put together.
He said: “I think it's really important that we continue to emphasise the difference between proportionality, based on size and complexity of business and appropriateness - seeking equivalent legislation and regulation that works with, not against, the grain of mutual and co-operative businesses.
“Requiring central clearing of swaps for non-systemic players seems completely disproportionate.
“In the UK, including building societies in the scope of the 8% corporation tax surcharge still seems both disproportionate and inappropriate.”
He added that the BSA supports Lord Hill’s initiative in the European Commission to review the cumulative burden of new legislation.
He also told the audience societies can do better when it comes to service, quoting 2012 research from PwC which showed that 40% of costs in financial services businesses are generated by wasteful activities.
He said: “We are all customers, we all know what it is to receive outstanding service. We also know how we react when service or processes fall short of what we expect.
“Correcting mistakes manual intervention when automated processes don’t quite work detracts from customer happiness and adds significantly to our costs.”
