Speaking at the annual Building Societies Association lunch today, Mark Hoban MP, financial secretary to the Treasury, said the terms of the loan given by government to the FSCS to pay for the fallout of Bradford & Bingley and the Icesave schemes must be renegotiated.
Hoban said: “It is vital that new terms are reached which are fair to taxpayers and levy payers alike.”
The current interest rate on the loans of LIBOR + 30 bps was set at a time when LIBOR was over 7% and the sector was experiencing crisis conditions but Hoban said that rate is “no longer appropriate”.
LIBOR is now 1.7% making the FSCS loan rate below the Government’s own cost of financing.
He added: “This is not acceptable and the Government is, therefore, negotiating revised terms with the FSCS.
“Affordability for the sector will be a key consideration but any deal must also be fair to taxpayers and industry and robustly defensible to the public and to Parliament.”
