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Building Society funding options may be reduced

The Financial Services Authority (FSA) is today said to be considering a crackdown on UK building society lending activities. This is an about turn round from the move, just a few years ago, which opened up new markets and new lending options to the U.K.'s building society sector. Seemingly a way of equalising the banking sector and the building society sector, initially there were positive aspects and positive moves, but in hindsight many societies seem to have taken on high risk assets which have literally blown up in their faces.

It is no secret that a number of building societies in the UK are currently struggling with severely weakened balance sheets and assets which could see further down pressure in the short to medium term. As a consequence we saw the Dunfermline building society split up and sold off, concerns regarding the West Bromwich building society and further rumours about other small to medium-sized operations.

While there is no doubt that many building societies have strayed away from the traditional building society conservative way of lending much of this was a result of pressure from investors to increase profits on an ongoing basis. Everybody needs to take their share of the blame and to lay everything at the door of building society directors is wrong.

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