Speaking on the sector's Financial Services Compensation Scheme bill from the bail out of Bradford and Bingley and the Icelandic banks, he said "what is notable... is that there has been no requirement for any government bailout of the building society sector; rather difficulties have been dealt with within the sector. At the same time, however, societies have been called upon to pay a significant share of the cost of bailing out failed institutions in the banking sector."
The cost of this bail out is just one of the many factors building societies must consider when structuring their interest rates.
Societies will look after the interests of all members - borrowers and savers - with savers outnumbering borrowers on a ratio of about 8 to 1.
Goodfellow noted "there has been a political and media chorus for all institutions to "pass on" the Bank of England base rate reduction announced last Thursday.... for all societies, however, there are a range of issues to be considered when looking at the structure of interest rates - these factors will affect each society differently."
He concluded that "in the light of building society performance, it is essential that we examine the future funding of the Financial Services Compensation Scheme... at the very least we need to examine the pros and cons of risk related funding of the Compensation Scheme so that those institutions that act in a prudent manner are appropriately rewarded."
