Building Society Association urges government to change regulations

In light of the £50 million deal between US private equity company JC Flowers and the Kent Reliance Building Society, the Building Society Association has today called upon the government to change the regulations which are stifling fundraising for building societies. Due to the mutual set-up of building societies they are unable to issue new shares, as UK banks and other financial companies can, and therefore have to issue new innovative investment tools or else leave the sector.

It will be interesting to see how the UK government reacts to this latest move by JC Flowers which could herald a major change in the UK building society sector and indeed could sound the death knell unless changes are forthcoming. This is a sector of the UK financial arena which has been around for hundreds of years and has been held in very high esteem by many people for some time. Whether or not some building societies are as up-to-date with business practices and funding arrangements as their banking counterparts is open to debate, but in many ways their hands have been tied regarding expansion and fund raising.

Many people would be sorry to see the end of the mutual society initiative in the UK.