New Clause 18 - Mutual societies

Part of Financial Services (Banking Reform) Bill – in a Public Bill Committee am 4:15 pm ar 16 Ebrill 2013.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury) 4:15, 16 Ebrill 2013

I beg to move, That the clause be read a Second time.

The coalition agreement, that wonderful document—[Interruption.] I say that in a sarcastic way, just for the record—that certain members of the Committee will remember with great fondness, although most of us will not, made a promise that the Government would

“bring forward detailed proposals to foster diversity in financial services, promote mutuals and create a more competitive banking industry.”

It is the fact that, three years on from the coalition agreement, we are still waiting for action to promote mutuality that has caused us to table this new clause. It would simply insert into the 2012 Act a requirement that regulators and the Government should make

“provision for the increased diversity of the financial services sector and promotion of mutual societies, including arrangements to measure the number of members of mutual societies”— in other words, whether more people are working with co-operatives or building societies, or less—

“and the market share for mutual societies as a proportion of the UK financial services sector.”

Building societies form a vital part of the British financial services sector, with mutual lenders and depositors currently having total assets of around £375 billion. Together, with their subsidiaries, they hold residential mortgages of £245 billion. They hold more than £250 billion of retail deposits, which accounts for more than a fifth of such deposits in the UK, and employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.

In the past, both sides of the Committee have expressed, at one level or another, agreement that there should be a greater role for mutuals in the financial services sector; indeed the Deputy Prime Minister himself—for it was he—has repeatedly extolled the virtues of models of shared ownership and the “John Lewis economy” at various times. Mutuals have consistently achieved higher levels of customer satisfaction than other financial services  providers, as demonstrated in last year’s Which? consumer survey, in which five of the top ten financial brands in the UK are mutuals.

It would be helpful if the Government would take this opportunity to live up to the pledge that they made when forming the coalition and state specifically what steps they are taking to promote mutuals. We have had a lot of words and general support, but we want to see specific hard measurements agreed to now so that we can track the progress of the coalition agreement three years on from its inception and see how they intend to fulfil that pledge by the time of their demise in 2015.