HC Deb 26 May 1978 vol 950 cc763-4W
Mr. Radice

asked the Chancellor of the Exchequer what steps are being taken to implement the first EEC Council directive relating to the business of credit institutions, particularly in respect of building societies and trustee savings banks.

Mr. Denzil Davies

The directive applies in principle to all credit institutions, other than those excluded under article 2.2. As I have already announced, we intend to publish later this Session draft clauses for the Bill to give effect to the proposals set out in the White Paper "The Licensing and Supervision of Deposit Taking Institutions", which will enable us to comply with the directive in relation to most deposit taking institutions, including banks.

However, article 2.5 of the directive allows for deferment of its application beyond December 1979 to certain groups or types of institutions where immediate application would cause technical problems which could not be overcome by them, and instances where the problems result from the fact that the institutions concerned are subject to a separate system of supervision from that applied to banks. Such deferment is for a period of not more than five years in the first instance.

Building societies are subject to prudential supervision by the Chief Registrar of Friendly Societies under the Building Societies Acts. Substantive amendments to those Acts will be required to comply with the directive. The Government intend to bring the necessary legislation forward as soon as it is practicable to do so, having regard to the pressures on the parliamentary timetable. Consultations on the form of the legislation are in progress with the Building Societies Association.

Trustee savings banks are at present in a transitional phase, following the Trustee Savings Banks Act 1976, and subject to supervision in accordance with that Act. It is envisaged that at the appropriate stage of that transition they will be brought within the provisions of the main legislation on deposit taking institutions.

The Government have therefore decided to defer the application of the directive to both building societies and trustee savings banks, and the Commission is being notified accordingly.