Nationwide demands review of FSCS levy
by Gill Montia
Story link: Nationwide demands review of FSCS levy
Nationwide Building Society is not content with the current arrangements for funding the Financial Services Compensation Scheme (FSCS), which is paid for by a levy on UK financial institutions.
New legislation introduced as a result of the collapse of Northern Rock in September 2007 meant that the FSCS picked up part of the cost of the rescue of Bradford & Bingley, a year later.
In addition, the collapse of Icesave could cost an estimated £800 million through the FSCS.
All UK banks and building societies are being expected to pay a heavier levy as a result and criticism of the new regime has already been voiced by Adrian Coles, director general of the Building Societies’ Association.
He has called the new measures unfair because building societies have traditionally been more conservative in managing their businesses than banks.
Nationwide is now demanding that the riskier banks contribute a greater share to the FSCS coffers and the lender’s chief executive, Graham Beale, says he will be lobbying the Government to review the levy.
Mr Beale describes Nationwide as a prudently run organisation and is adamant that its members should not pay for the mistakes of banks that took on high levels of risk.
Traditionally, Nationwide funds its lending through retail deposits and has therefore not been as exposed as some of its rivals to the volatility of the money markets prompted by the credit crisis.