UK building societies pull rank
It has been revealed that John Goodfellow, the outgoing chairman of the Building Societies Association, has advised members not to comment on one another's profitability and prospects for the future. Quite rightly, Mr Goodfellow is highlighting the serious nature and damage which rumours can do in the current environment and how even a simple comment can be blown out of all proportion.
In what is effectively a self-fulfilling prophecy, many observers are waiting for the next building society to collapse as we saw with the Dunfermline building society. This has created a very difficult situation for members of the UK building society sector as any positive comment with regards to a competitor may well encourage a backlash against a different society. The advice to refrain from commenting on other building societies and their financial backing would appear to be very sensible especially in the current environment.
While traditionally a very safe and secure sector, building societies in the UK appear under more pressure than ever before which many put down to a relaxation of their lending and investment guidelines just a few years ago. This has introduced significant risk to some societies which is starting to taint the sector as a whole and cause problems with confidence.
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