MUTUAL lenders have been favoured by politicians since banks led the way into the financial crisis, but a study yesterday showed almost every building society boss felt the sector was being harmed by red tape.
The result is that innovation and diversification are being crushed, preventing the sector from making improvements which could help customers and make the sector less vulnerable to a crash in future.
“The sheer volume of regulation” was cited as one of the top problems facing the sector by 94 per cent of chief executives surveyed by the Building Societies Association (BSA).
“A lack of regulation tailored to different types of firm” was a top issue for 74 per cent, while “the complexity of regulation” was cited as a major problem by 61 per cent of chiefs.
Overall, the bosses argued that the regulator burden was roughly 25 per cent bigger than they would expect. Different regulators tend to duplicate work, while short consultations on new rules mean firms are pushed to react unreasonably quickly to any changes.
On top of that, the CEOs complained that the rules never seem to be final, with one set of regulations followed up with another in the same areas – for instance, the mortgage market review (MMR) rules being rapidly followed by the mortgage credit directive.
“No one has responsibility for assessing the cumulative impact of the regulatory burden.
“With new rules coming thick and fast from the UK and the EU there is a pressing need for this,” said BSA boss Robin Feith.
“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.”