Mr. William O'Brien:

Clause 41 is entitled "Protective provisions for specially formed successors." The spirit of the amendments is to offer some protection for the successors of takeovers and mergers of mutual societies. During public consultation on the Bill, the five-year protection period was one of the most important subjects of debate. People who were involved in the consultation envisaged that there might be problems if the Bill did not afford protection.

Under the provisions of the Building Societies Act 1986, societies that convert to banks are protected from external takeover for five years after conversion. That protection was designed to protect those that converted from takeovers during the early years in what people in the business refer to as the stock exchange jungle. The organisations that converted to plc status had that protection. In an increasingly competitive environment, that protection gives a converting society a significant advantage.

During the Bill's consultation period, a strong body of opinion emerged that organisations that wanted the advantages of a stock market listing should also accept the disadvantages, such as the threat of a takeover. It is unacceptable to the continuing mutual societies that a plc bank that was once a building society should be able to mount hostile bids for other institutions—including mutual societies—and yet remain immune from takeover for five years. One can readily see that there is an imbalance: an organisation that converts to plc status is protected but the 70 mutual societies that remain are not.

The amendments would offer some protection not just to building societies but to mutual societies, and would apply to all mutual organisations. The Government accepted that point. The protection will be removed if a converting building society acquires another financial institution during the five-year period. That is the significant point of the amendments, and they would protect existing mutual building societies.

As the hon. Member for Bournemouth, West (Mr. Butterfill) pointed out, there may be anomalies in the drafting of the amendments, but the principle and spirit behind them are correct. I appeal to the Minister and other hon. Members to support them, because they would correct an existing imbalance. There is nothing wrong with the amendments; they are constructive and are designed to add strength to the Bill. I hope that the Minister will appreciate the sincerity and spirit behind the amendments and accept them.