HC Deb 01 February 1982 vol 17 cc5-6
5. Mr. Squire

asked the Secretary of State for Trade whether the review of the restrictive trade practices of the Building Societies Association has yet been completed.

Mrs. Sally Oppenheim

This is a matter for the Director General of Fair Trading. I understand that some of the association's recommendations are still the subject of discussion.

Mr. Squire

I thank my right hon. Friend for the interim nature of her reply. Is she satisfied with the monitoring of the BSA-Office of Fair Trading agreements, especially the choice of insurance company, which, in practice, a number of building societies still do not grant? Does she agree with the National Consumer Council report that few members have any influence on the way in which their building societies operate?

Mrs. Oppenheim

I have a considerable amount of sympathy with the first half of my hon. Friend's question. I hope that the practice of nomination of insurance companies will no longer continue. Following discussions last year between the Director General of Fair Trading and the BSA, the association no longer recommends that borrowers should insure their properties through an agency of the building society. The Director General says that he is satisfied that if the building societies follow the association's recommendation, complaints about the freedom of borrowers to choose an insurance company should no longer arise. I assure my hon. Friend that the position is being carefully monitored.

Mr. Weetch

Is the Minister aware that many restrictive practices arise because building society boards of directors are self-perpetuating, anti-democratic bodies? Is she further aware that many of those boards—that of the Anglia building society being a flagrant example—seek to prevent new blood from joining them? Will she press her right hon. and learned Friend the Chancellor of the Exchequer to introduce primary legislation to eradicate some of the abuses?

Mrs. Oppenheim

Self-perpetuating, anti-democratic organisations have no place in my good books. If the hon. Gentleman has a particular practice in mind—I am sure that he is raising a serious point—he should draw the matter to the attention of the Director General. I should be grateful to see a copy of his letter.

Mr. Jessel

Is my right hon. Friend aware that some building societies are not complying with the recommendations of their association? Is it not utterly wrong that a person with a mortgage should be forced by a building society to insure his house with an organisation that may not give him the best value possible? Will she strongly support any measures by the Director General of Fair Trading to stop that practice for once and for all?

Mrs. Oppenheim

Yes, that practice is wrong. Yes, I shall strongly support measures taken by the Director General. If my hon. Friend knows of specific examples, I hope that he will bring them to the Director General's attention.

Mr. John Fraser

My hon. Friend the Member for Ipswich (Mr. Weetch) possibly had in mind the fact that directors of building societies find it easier to garner the votes of investors than do those who enter from outside. Will she consider that aspect?

Mrs. Oppenheim

Yes.