News

Teachers Building Society welcome Compensation Scheme Review

The Financial Services Authority has announced that the controversial compensation scheme for failed financial institutions will be reviewed, following months of pressure from the building society sector, including Wimborne-based Teachers Building Society.

The Financial Services Compensation Scheme (FSCS) is meeting compensation claims at five failed banks, including Bradford & Bingley and London Scottish Bank. Earlier this year, MP Bob Walter visited the Dorset mutual to hear about the effect of the FSCS levy which, in its current format, hits mutuals such as Teachers Building Society harder than banks even though building societies have generally operated a far less risky approach to lending, and funding that lending.

Bob Walter raised the issue with the Treasury and pushed the case for a review of the policy with ministers. He also agreed to support an Early Day Motion calling for the introduction of a more equitable compensation scheme, and the campaigning has paid off with the FSA’s decision to begin a review of the scheme next year.

James Bawa, chief executive at Teachers Building Society, welcomes the announcement, “The levy in its current form is extremely unfair on our members. At Teachers, we take a very prudent and responsible approach to lending and yet we are being asked to pay a disproportionate amount towards the cost of compensating customers of institutions that have followed a far less responsible path. The sooner the review is underway, the better.”

An article about Teachers Building Society and the financial services compensation scheme review has been posted on The Echo website here