Treasury is consulting on a set of amendments to modernise the Building Societies Act 1986. The key changes will update the funding model and corporate governance requirements of societies.
The Government realises that the current restriction that says at least 50% of a building society’s funding must be raised from their members’ deposits in savings accounts, while still in principle appropriate and important, may create unique challenges that other financial institutions do not have. To address this, it is proposing to exclude liquidity insurance facilities within the Sterling Monetary Framework, cash received from repurchase agreements of Level 1 HQLA and senior non-preferred debt instruments held for MREL purposes from the funding limit calculation. It also proposes raising the SME turnover limit from £1m to £6.5m while keeping the threshold of exempted deposits as up to 10% of total funding.
On Governance, the proposal is that the law should explicitly allow virtual member participation in general meetings, that just one director may sign the balance sheet on behalf of the board and that the requirement for affixing a seal also be updated in line with companies.
Consultation closes on 28 February 2022.