HC Deb 27 April 1978 vol 948 cc1633-4
19. Mr. McCrindle

asked the Chancellor of the Exchequer if he is satisfied with the operation of the Building Societies Act so far as it relates to the protection of investors.

Mr. Davies

This is one of the questions that we shall be considering when inquiries into the irregularities at the Grays Building Society are completed. Meanwhile the hon. Member will have noted that the Building Societies Association has undertaken that the Grays shareholders and depositors will not lose their money.

Mr. McCrindle

I pay full tribute to the Building Societies Association in general and the Woolwich Equitable in particular for their action in the aftermath of the Grays Building Society affair. Will the Minister make sure that the legislation, which was introduced nearly 20 years ago, for the protection of building society investors remains adequate in the light of recent events?

Mr. Davies

The hon. Member is right. Section 43 of the Building Societies Act 1962 covers cases of this kind. Discussions are going on with counsel and others with a view to putting the scheme into operation to safeguard depositors.

Mr. Budgen

Will the Minister confirm that the Government's present so-called guidance to building societies about the level of lending is unlawful, arbitrary and unjustified by the Building Societies Act, or any other lawful authority? It is particularly unfortunate because it is forcing building societies to buy gilts, which is against the whole spirit of their establishment in the first place.

Mr. Davies

These guidelines are not unlawful; they have been arrived at by voluntary arrangement and agreement between the building societies and the Government. I see nothing unlawful in that.