§ Ms LawrenceTo ask the Chancellor of the Exchequer if he will make a statement about the Banking Act 1987 (Exempt Transactions) Regulations 1997 and their effect on retail co-operative societies and other industrial and provident societies. [85313]
§ Ms HewittAs part of the general review of exemptions from financial services legislation, the Treasury has been looking at the exemptions from the Banking Act which:
- (i) allow industrial and provident societies (I&Ps) to take deposits from their members in the form of withdrawable share capital (WSC), in circumstances which would otherwise require authorisation by the Financial Services Authority; and
- (ii) allow retail co-operatives which are members of the Co-operative Deposit Protection Scheme (CDPS) to take deposits in the form of loans from the public.
The Treasury has decided to continue the exemption for WSC, subject to compliance with a code of practice which will require societies to make it clear to those subscribing for WSC that this is risk capital, where such issues rely on the exemption. The Treasury has today issued a consultation document on the proposal, and will make a further announcement after considering the responses.
455WFollowing consultation with representatives of the Co-operative Union, the exemption which allows CDPS members to take deposits in the form of loans from the public will end when the current term of the CDPS comes to an end at the end of March 2000. Societies will repay such loans as they mature.