A survey of financial services firms by the Confederation of British Industry and PWC revealed that the mutual sector struggled under the weight of regulation.
Rain Newton-Smith, CBI director of economics, said: “Building societies have struggled this quarter, likely as a result of the impact of the Mortgage Market Review, constrained buyer affordability in London and the South East, and stronger competition in the mortgage lending market.
“But a strengthening of household finances, continued low interest rates and the recent changes to stamp duty suggest that conditions in the sector should pick up ahead.”
The majority of firms surveyed said they expected the overall growth in business volumes to continue into the next quarter while building societies said they expected volumes to recover.
Speaking to the FT, Robin Fieth, chief executive of the Building Societies Association, said regulation which remained unchecked could ‘well reach a tipping point’ that disadvantage both customers and providers.
He added there is a pressing need for someone to be responsible for assessing the cumulative impact of the regulatory burden.
“It’s obvious that boards must regularly discuss and act on regulatory and compliance matters. What cannot happen is that this topic forces important issues like strategy, development, governance and customer service to the periphery,” he said.
