§ Mr. CousinsTo ask the President of the Board of Trade what provisions govern the reporting by building societies of their use, and the results of use, of section 23 of the Building Societies Act to their members or shareholders; which agency is responsible for monitoring the use of building societies' powers under section 23; how this agency has exercised these powers in the last two financial years; and in what form the efficacy of this monitoring is reported to Parliament.
§ Mr. NelsonI have been asked to reply.
A building society wishing to adopt the power to hedge under section 23 of the Building Societies Act 1986 must first obtain the approval of its members, by special resolution, to include that power in its memorandum. There is no statutory requirement for subsequent reporting to the members on the exercise of the power, but directors could choose to do so.
The Building Societies Commission is responsible for the regulation and prudential supervision of building 336W societies. It has issued a prudential note—PN 1989/3—on balance sheet mismatch and hedging, which gives guidance to societies on the risks arising from balance sheet structure, and sets out requirements for management, systems and the prudent use of hedging instruments.
The Commission reports annually to Parliament, in accordance with section 4 of the Building Societies Act 1986.