Recruitment

Busy year ahead for new BSA chairman

September 2006

What the main challenges facing you as chairman of the BSA, both in the short and long-term?

Probably my most important task is to represent the building society sector to the Financial Services Authority (FSA) in its discussions about the changing structure of regulation.

It has announced that it wants to move away from the rule-based regulation that it used to build the FSA in its first few years towards what they call principles-based regulation. That sounds a good way to go but there is lots of work to define broad responsibilities under that regime and what kinds of evidence we will need to show that we are abiding by this new kind of regulation.

So the first point is making sure that building societies have a good voice in shaping what will be the future of regulation for sometime to come.

Secondly, there are a lot of changes in the mortgage market - some of them due to shifts in the treatment of capital - which the FSA and other bank regulators are introducing – and this will cause competition to get even stronger. Thinking through what that will mean and its impact on building societies is an important task for the next 12 months.

Thirdly, there are likely to be domestic issues for the BSA which will need to be dealt with as well. These include the way in which we support some of our policy issues, ongoing discussions about governance and some domestic housekeeping, like pensions and property and so forth.

What are the key challenges for building societies, short and long-term?

I think these turn around, first of all, making sure that the regulatory world we live in comes at a reasonable cost.

Secondly, there is a growing pressure on interest margins from competition in the mortgage market and also, increasingly, from competition in the savings market. These are compressing the interest margins on which most building societies have lived.

Thirdly, they need to take into account the changes in capital structure that I referred to earlier, which go under the name of Basel II. So, there is quite a lot going on there, but also good opportunities for customer growth.

How will you divide your time between BSA duties and N&P?

The time requirement varies between half and one day a week and fluctuates, so it is not huge all the time. It reaches a peak around Council meetings and other major events like the Annual Conference; the rest of my time is happily filled by N&P.

What are N&P's priorities?

Maintaining our position in the mortgage market and developing our other streams of income with our independent Financial Advice Service that we have been growing, our banking income and our insurance income and keeping our costs and provisions in good order.