§ Mr. Weetchasked the Chancellor of the Exchequer how many building societies have yet to receive a visit from registry officials in connection with monitoring procedures.
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§ Mr. Bruce-GardyneThe registry's monitoring of building societies for prudential purposes combines scrutiny of returns, discussion with management at the registry and visits to societies. Visits to societies by the registrars and other officials of the registry are paid:
- (i) when specific issues arise, either at the instance of the society or from the Registry's scrutiny of the regular monthly and quarterly monitoring returns;
- (ii) as part of the series of visits to inspect the systems of control and inspcection in societies, followed by discussions of the results with the Board. These have focussed on societies with total assets of between £2 million and £100 million: 120 out of the 125 societies in this group have been visited at least once in the last 4 years;
- (iii) as part of the programme of visits by Registrars to see the Boards of the larger societies to discuss matters including control and inspection. 37 of the 48 larger societies were visited for this purpose in the last 3 years;
- (iv) more generally, on an informal basis to keep in touch with developments in societies.
A series of visits to very small societies will be necessary from next June when the provisions of the Building Societies (Authorisation) Regulations 1981 relating to minimum capital and management take effect.
§ Mr. Weetchasked the Chancellor of the Exchequer whether he is satisfied that part-time directorships are sufficient to discharge directors' responsibilities for financial control and accountability under section 76 of the Building Societies Act 1962.
§ Mr. Bruce-GardyneYes, provided they recognise the need to make arrangements to discharge those responsibilities. In general there is advantage in the board of a building society having a balance of both part-time directors who have experience in wider fields, and one or more full-time executive directors. Indeed in small societies part-time directors with relevant experience can contribute directly to the system of financial control and accountability.
§ Mr. Weetchasked the Chancellor of the Exchequer how many building society directors, at the last convenient date, were part time.
§ Mr. Bruce-GardyneAn answer to the hon. Member's question cannot be given in the terms in which it is put. The annual returns for each society generally show which directors hold executive positions in the society. But aggregate figures are not readily available.
§ Mr. Weetchasked the Chancellor of the Exchequer what improvements, as a result of registry visits and monitoring, have taken place in the financial and control system of small building societies.
§ Mr. Bruce-GardyneReturn visits made in 1982 by registry inspection teams to 20 small building societies have shown that inprovements have been made to these societies' systems of control since the earlier visits. In general systems were found to be better documented and more comprehensive. These improvements have resulted not only from the recommendations made following the previous visit by the registry but also from the significant contributions made by the accountancy profession, the Chartered Building Societies Institute and the Building Societies Association. Much of this work is of a continuing nature and further improvement will be sought and achieved as experience and techniques are developed.
§ Mr. Weetchasked the Chancellor of the Exchequer whether he will introduce legislation to ensure that small 209W building societies have sufficient staff to ensure adequate recording of financial material and the establishment of an efficient framework of financial control.
§ Mr. Bruce-GardyneNo. The Building Societies Act 1962 already requires all societies of whatever size to keep proper books of account and to establish and maintain satisfactory systems of control. It is the responsibility of a society, and more particularly, the board of directors, to determine the means by which this requirement is met. The adequacy, or otherwise, of a system is not related directly to the numbers of staff, although it is clearly a factor.
§ Mr. Weetchasked the Chancellor of the Exchequer if he will introduce legislation to ensure that the Registry of Friendly Societies contains a body of accounting skills specialised in examining and auditing building society procedures and accounts.
§ Mr. Bruce-GardyneLegislation is not necessary. I am considering with the Chief Registrar how the need for some increase in accounting expertise in the registry might best be met, consistent with the need to contain public expenditure and civil service manpower.