BSAâ€™s new service could impact authority of CML
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by Lin Freestone
Earlier this month the Building Societies Association (BSA) announced that it was planning to expand the work that it does on behalf of building societies by representing their interests in the mortgage and housing markets.
In recent years the Building Societies Association has tended to concentrate on matters such as the savings market, corporate governance and treating customers fairly, but has invested relatively little in mortgage market issues.
The BSA represents all 59 building societies in the UK, which between them have total assets of more than Â£360bn. Together with their subsidiaries, they hold residential mortgages of Â£250bn, more than 20% of the total outstanding in the UK.
Building societies make a distinctive contribution to the UKâ€™s financial services market and independent research has revealed that building societies, compared to their competitors, offer lower mortgage rates, higher savings rates and higher standards of service. They are mutually owned without external shareholders
Building societies are keen to build upon this reputation and believe that their best interests can be served by the BSA representing them in all of the major markets in which they operate.
The chairman of the BSA, John Goodfellow, has commented that recent events have accentuated the distinctiveness of building societies. Building societies have attracted record inflows of new savings in recent months and operate a robust and long-standing business model.
The service will be operational from January 2009 and it is anticipated that, in time, most if not all building societies will use the new mortgage service from the BSA and move their allegiance from the Council of Mortgage Lenders.
It is considered that the Council of Mortgage Lenders is dominated by the large banks which supply the majority of lending for mortgages. The smaller segment offered by the building societies could be better represented, which would reinforce the standing of building societies in the financial sector.
It will help to ensure that the differences between building societies and banks are more widely understood.
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