He also noted two areas where building societies were, and are, critical of the authorities' response - the sharp reduction in interest rates and the disproportionate FSCS levies on building societies.
Goodfellow criticized the ‘savage' nature of the Bank of England's decision to cut interest rates to historically low levels - "it seemed wrong to us to reduce interest rates so sharply, so quickly.... many societies were sympathetic to the plight of savers and felt it appropriate to look after the interests of, especially, their elderly investors who had saved for years in the expectation of living off their interest income, but found this income rapidly plummeting towards zero as the Bank implemented an aggressive rate cutting policy. We also questioned whether this policy would benefit the mortgage market or, rather, restrict the flow of funds available for mortgage lending even more than was likely to be the case as a result of other developments in the economy... in our view the interest rate cutting policy did not have to be quite so savage."
He also noted the sector's anger at the disproportionate Financial Services Compensation Scheme levies imposed on building societies from failed banks and called for change - "We need to find a fairer mechanism for funding the Compensation Scheme and we need to put in place arrangements that give longer term certainty to institutions so that they are not faced with huge additional burdens on their profit and loss account at very short notice. We also need to ensure that the Government recognises the risk from a shortfall of collections from Bradford & Bingley and Iceland. I am sure that we will all agree that some lender representation in the Bradford & Bingley run-off process would be sensible - given that it is the banks and building societies that have to pick up the bill if there is a shortfall at the end of the day."
On the nationalised banks he said we need to "convince the authorities of the potential for unfair competition from the nationalised banks. We need framework agreements in place similar to that governing Northern Rock."
Looking to the future he acknowledged there are challenges that face the sector, but concluded by saying "we can all commit to the principle that all societies wish to see a strong mutual sector and will individually and collectively work to avoid any further failures. I am also convinced that such a commitment is needed from Government and regulators. The time for only nice words by the authorities about mutuals is over. We need to see action, support and a desire to build a better future gaining traction in the minds of the Tripartite.”
