§ Mr. Squireasked the Chancellor of the Exchequer if he will set out the terms on which the Kingston Building Society is to merge with the London and South of England Building Society and the arrangements under which the members of both societies are to be consulted about these terms.
§ Mr. LawsonThe terms of the proposed merger that have been agreed between the boards of directors of the Kingston Building Society and the London and South of England Building Society are as follows:
- 1. Five of the present directors of the Kingston Building Society together with the solicitors of that society will form a Kingston advisory panel for a period of three years from the date of transfer.
- 2. The shareholders of the Kingston Building Society as at 30 June 1981 whose balances are transferred to the London and South of England Building Society will continue to receive interest at the rate of ¼ per cent. above the rate recommended by the Building Societies Association.
- 3. The mortgagors of the Kingston Building Society whose balances are transferred to the London and South of England Building Society will continue to pay interest at the rate recommended by the Building Societies Association.
- 4. Subject to the deficiencies not exceeding £500,000 the shareholders of the Kingston Building Society will receive an annual bonus of 1 per cent., calculated on the minimum balance of each account held between 30 June 1981 and the date of payment for a period of three years. The payment dates will be 31 October 1982, 1 October 1983 and 1 October 1984.
- 5. The members of the Kingston Building Society will be required to vote upon a resolution to transfer the engagements of the society on these terms either in person or by proxy. It is necessary for two-thirds of those who vote to be in favour of the motion of it to be passed. A similar motion will have to be passed by the members of the London and South of England Building Society unless the Registrar agrees, on application being made to him, that a resolution to like effect may be passed by the board of directors of the London and South of England Building Society.
§ Mr. Squireasked the Chancellor of the Exchequer who will be responsible for ensuring that the ordinary members of the Kingston Building Society will suffer no financial loss as a result of any irregularities.
§ Mr. LawsonThe responsibility for managing a building society's affairs so that the ordinary members do not suffer loss rests in general with the directors. In the Kingston Building Society, so far as can be ascertained at present, there is no question of any member suffering loss. It may, however, be relevant to mention that the Building Societies Association has recently stated that, while it has never formally committed itself to guaranteeing that no investors would ever suffer loss it is confident that, in the event of difficulties arising in a particular society, there would be a similar constructive response from other societies in the future as there has been in the past.
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§ Mr. Squireasked the Chancellor of the Exchequer what steps have been taken by the Chief Registrar of Friendly Societies following the discovery of irregularities in the accounts of the Kingston Building Society; and if he will make a statement.
§ Mr. LawsonThe Chief Registrar has had meetings with respresentatives of the boards of directors of both the Kingston Building Society and the London and South of England Building Society following the discovery of irregularities by the auditors of the Kingston Building Society. Whilst it appears that any resulting loss to the society will be fully covered by the amount of the Kingston Building Society's reserves, it was nevertheless agreed in principle that, in the interests of the members, a transfer of the society's engagements to the London and South of England Building Society should take place as soon as is reasonably practicable.
§ Mr. Squireasked the Chancellor of the Exchequer whether the Chief Registrar of Friendly Societies or his staff have previously held discussions with directors of the Kingston Building Society as part of the regular series of consultations.
§ Mr. LawsonYes. Staff of the Registry of Friendly Societies visited the Kingston Building Society during February 1980, as part of the series of visits to and discussions with building societies currently taking place. An assistant registrar subsequently discussed matters arising from this visit with the board of directors of the society during March 1980.