FSA defends actions over Dunfermline Building Society debacle
While the FSA has again come in for significant criticism with regards to its handling of the Dunfermline Building Society break up and take over, the authority has defended its actions on all counts. In a surprise move it was revealed that the FSA has been monitoring the commercial loan book of the Dunfermline Building Society since 2005 when concerns were first raised.
Those who followed the situation will be well aware that the Dunfermline Building Society, Scotland's largest society, was effectively split up and sold on within a very short space of time after a number of problems were made public. The UK Treasury, conscious of criticism regarding the extended takeover of Northern Rock, acted very swiftly to take on significant liabilities and sell on the branch network to the Nationwide Building Society. However, there were claims that the government acted far too quickly and did not give enough time for a consultation period which could, according to the Scottish executive, have seen a funding package put in place and the business retain its independence.
In many ways the UK authorities were in a very difficult situation having received significant criticism for acting too slow with the Northern Rock and again in the firing line after reacting quickly to the ongoing Dunfermline problem. It is interesting to see that a downgrade of debt ratings across the building society sector was announced by Moody's earlier this week, which may reflect ongoing concerns about loan books within the sector.
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