Building Societies Bill (Hansard, 25 July 1986)

§ Mr. Ian Stewart

Subject to the Bill receiving Royal Assent today, the Building Societies Commission will come into being on 25 September 1986.

Paragraph 7 of schedule 20 comes into operation immediately on Royal Assent. This removes retrospectively any doubt about the vires of work undertaken since 19 December 1985 by a building society in preparation for powers which will be available to it under the new legislation.

During the autumn the commission will make those statutory instruments which need to be effective when the main provisions of the Bill come into operation. It is intended that most of the main provisions affecting societies will be brought into effect from 1 January 1987 by a commencement order. There will be few exceptions which for various reasons it will not be practicable to bring into operation until later.

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The Building Societies Association has asked that adequate time should be allowed for the establishment of an ombudsman scheme and its recognition by the commission. The Government have accordingly agreed that the requirement to belong to a recognised scheme should not be brought into effect until 1 July 1987.

Before societies can invest in bodies which lend on security of land in other EC member states, links will need to be established with supervisors in those other countries. The power to invest in such bodies will accordingly not be brought into effect until 1 January 1988.

Extensive preparatory work and consultation will be needed before detailed regulations governing the conversion of any society to company status can he made. It is at present proposed that these powers should therefore be brought into effect from 1 January 1988.

Clause 35, which prohibits making the offer of a class 1 advance conditional on the use of another service offered by the society and requires different services to be priced separately, will not be brought into effect so long as a satisfactory code of practice covering the same ground has been introduced by 1 January 1988 and proves to be effective in practice.

Sections 28–30 of the Building Societies Act 1962 will not be repealed until a suitable code of practice has been introduced dealing with the taking of additional security from third parties.

It is intended to make a transitional order in due course under section 121. This will provide, among other things, for the new accounting provisions to apply to accounts for a society's financial year starting on or after 1 January 1987; for mergers to proceed under the provisions of the 1962 Act if the statement required by section 20 of that Act has been approved by the Chief Registrar before 1 January 1987; and for phasing out the special advance provisions in sections 21 to 24 of the 1962 Act.

Societies will be able to adopt the powers provided under the Bill by passing a special resolution approving the necessary memorandum of powers from two months after Royal Assent and then registering it to take effect from 1 January 1987. Other rule changes to conform to the new Act may be made between 1 January 1987 and the autumn of 1988.

Implementation of the conveyancing provisions in clause 124 and schedule 21 is a matter for my noble and learned Friend the Lord Chancellor.