Speaking in his last address as Building Societies Association (BSA) chair at the trade body’s annual conference, Robin Fieth (pictured) said: “Don’t do things that will actively slow down, undermine or otherwise damage the sector. We are here to deliver on the manifesto commitment to double the size of the [mutuals] sector. Don’t put roadblocks in the way.”
He pointed to the BSA’s active campaign against proposed reforms to the ISA regime, which was a key example that could hinder growth.
Reports earlier this year had suggested that the government was looking at cash ISA reform that would lower the maximum saving limit per year to £4,000, a fall from £20,000, or scrap them completely.
In April, Emma Reynolds, the Economic Secretary to Treasury, said ISA reform would be considered “in the round” but that the withdrawal penalty and purchase price cap for the Lifetime ISA were likely to stay.
The move to reform the cash ISA regime has been criticised by the industry as it is popular with consumers and used to fund mortgages – therefore, changes could make mortgages more expensive.
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Fieth added in a Q&A later that day that he hoped the Chancellor was “listening” regarding proposed cash ISA reform, but feared that she wasn’t.
He said a potential solution that would “work incredibly well in achieving all everyone’s objectives” was not to change the cash ISA regime as it is “really well-understood by consumers” and has “high impact, really high penetration, and it’s got a lot of flexibility”.
Fieth said the other side of the solution was a new ‘Tell Sid’ campaign, which was a 1986 campaign encouraging people to buy shares in the newly denationalised British Gas.
He said the New York Stock Exchange ran a similar campaign over 16 years from the 1950s, which “shifted US citizens away from [holding] everything in cash to them being the investing nation they now are”.
Fieth said this was a “really long-term campaign” but it would get the government to the “exact outcome” it wants.
“We don’t mess around with the mortgage market, we don’t mess around with retail funding. We do incrementally get more and more people investing in the market,” he noted.
Mutuals and co-operatives can ‘play the long game’
Fieth said the “huge advantage” that mutuals and co-operatives have is that they “play the long game”.
“If this quarter’s results don’t hit target, it’s not the end of the world. If they don’t hit target every quarter for awfully long time, then it really does make it serious, but you’ve got the flexibility,” he said.
Fieth said that “consistently” since the end of the financial crisis, “every time the major bank lenders turn away from the mortgage market, we take share, and in periods of uncertainty, we take share”.
“It’s a real period of real challenge for everyone, but a period of real opportunity as well,” he noted.
He urged members to “continue to be the disruptors and the innovators now and into the future”, adding that the BSA welcomed “strongly” the acquisitions by Nationwide and Coventry Building Society.
Fieth also said the trade body welcomed the “sustained commitment of our members to keeping a presence on high streets up and down the country and in increasingly innovative ways” and the government’s commitment to double the sector, as well as the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) reporting to the government later this year on the mutual landscape and what they can do to support growth and development.
“We encourage our regulators to be bold, not just seeking to level the playing field, but to actively be promoting structural diversity,” he noted.
Fiethe said that currently, the source book is “anti-competitive, outdated and hinders growth”.
“That needs to change, as does the approach to all other banking regulation that tends to be designed for shareholder-owned banks and then applied without adjustment to mutuals,” he noted
Fieth said that following on from the amendment to the Building Societies Act last year, which gained royal assent in the wash-up period before the election, the “sector does not seem to be calling for major new legislative changes for building societies”.
“If we wanted to create a new Mutual or Cooperative Banking Act for the UK, for example, and from a standing start, we need to get on that now, but from what I what we hear from the sector [there] is, more or less, at the moment, no huge demand for that,” he said.
Fieth said the legislation for credit unions was “older” and “incredibly constraining”, and it would be great to move towards a “framework that is far more empowering, puts a lot more responsibility on boards to run their businesses really well”.
