Clause 3

Part of Financial Mutuals Arrangements Bill – in a Public Bill Committee am 9:45 am ar 25 Ebrill 2007.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Edward Balls Edward Balls The Economic Secretary to the Treasury 9:45, 25 Ebrill 2007

I pay particular tribute to the hon. Member for Bournemouth, West, not simply because of his leadership on matters of mutual policy, but because of his wide experience in the House, including as an excellent Chairman of the Standing Committee that considered the Finance Bill last year. His knowledge of procedure is second to none, and the fact that he ensured that we voted correctly was appreciated by hon. Members on both sides of the House, myself included.

New clause 3 will give the Treasury the power to modify legislation relating to the transfer of the business of building societies, friendly societies and industrial and provident societies, to make those transfers easier. The modifications will apply where the transfer is from one mutual society to a company that is a subsidiary of another mutual society. The Treasury may also use the power to ensure that members of the transferring mutual society, and new customers after the transfer, are given certain membership rights in the owning mutual society.

The Treasury may also make other changes that relate to the transfer—for example, to prevent a change in ownership of the new subsidiary company for a specified period. Where the power is used to modify primary legislation, or to modify the rules on subsidiaries, it will be subject to the affirmative procedure. But it may also be used to modify secondary legislation—for example, transfer regulations made under section 102 of the Building Societies Act 1986—in which case the negative procedure will apply.

These amendments are intended to lighten the burden on financial mutual societies where they transfer ownership from one type of mutual to another. The wider opportunities for a more diverse range of ownership in the sector will help it to compete both internally and in the wider financial sector. The Treasury will also consult on the appropriate means of restricting further transfers of ownership outside the mutual sector, so that the procedure does not become a back-door means of demutualisation. That is likely to be achieved by placing a time bar on future transfers of ownership.