Speaking at the Labour party conference, Thomas, who is chair of the Co-operative party, called on the government to take action to avert the “slow death” of the mutual sector.
The Co-operative party is worried that new rules laid down by European regulators, which will force banks to set aside more capital, will also hit building societies, at a time when they need to use their capital to work as hard as possible for them.
Thomas said that a “lack of flexibility” by the Treasury and the FSA in helping building societies to meet the requirements was “likely to cause significant problems”.
The building society sector has a good record of looking after people’s savings and most have traditionally been relatively conservative in their approach to business.
However, mutual societies have been hard hit by the credit crisis, with a number collapsing and others merging over the last three years.
Adrian Coles, director-general of the BSA, said last Friday that a strong, vibrant mutual sector “is good for society and for everybody’s financial well-being – not least because we need a significant part of the financial system to concentrate on satisfying customers’ needs rather than shareholders’ returns”.
Thomas said there was a “tragic irony” that the one set of financial services businesses least responsible for the banking crisis were now at risk themselves because of the introduction of measures to prevent such a crisis from ever happening again.
