§ Mr. Michael Forsythasked the Chancellor of the Exchequer if he will make a further statement about the proposed building society legislation referred to in the Gracious Speech.
§ The Solicitor-General[further to the answer given by the Minister of State, Treasury, on 7 November 1985, c. 3I can provide the following information.
The Government issued a consultation paper last year seeking views on the way in which conflicts of interest and anti-competitive practices could be avoided if building societies and other financial institutions were to offer conveyancing services to the public. Following that consultation, the Government have concluded that there is no difficulty in principle in such institutions providing conveyancing to persons to whom they are not also offering a loan. However, the Government are not satisfied that lending institutions could safely be permitted to offer both conveyancing and a loan in the same transaction. It is therefore proposed to prohibit lending institutions from providing conveyancing, either directly or through a subsidiary company in which they hold a majority stake, to those who are also borrowing from them.
The Government are also examining the possibility of estate agents providing a combined service of sale and conveyancing to vendors, and of lending institutions providing conveyancing to borrowers from them through associated companies in which the lender holds only a minority shareholding. Consultation on those matters is not yet complete.
It is also proposed to set a number of other conditions to ensure proper consumer protection. In particular, institutions will be required to ensure that their conveyancing work is supervised by a qualified person; and adequate arrangements will have to be made to protect the consumer against negligence or fraud on the part of those providing the service. Details will be announced in due course, after further consultations with the interests concerned.
§ Mr. Lesterasked the Chancellor of the Exchequer if he will make a statement about the provision to be made in the Building Societies Bill for the conversion of building societies to company status.
§ Mr. Ian StewartThe Government have made it clear that the new building society legislation should allow building societies to become companies, subject to the approval of their members. In view of the complexity of the issues, however, we have decided to publish a consultative paper setting out proposals, on which comments are invited by the end of January.
General provision for the conversion of building societies into companies is made in the Bill as published 355W today and, in the light of the consultation, detailed provisions will be brought forward during the passage of the Bill. Copies of the consultative paper have been placed in the Library.