Part of Orders of the Day — Building Societies Bill – in the House of Commons at 5:30 pm on 17 March 1997.
Mr Douglas French
, Gloucester
5:30,
17 March 1997
I should like to take this opportunity to declare an interest, in that I have accounts with several building societies.
I suspect that I may be in a minority in fundamentally disagreeing with the proposition of my hon. Friend the Member for Bournemouth, West (Mr. Butterfill). One always feels a little uncomfortable disagreeing with my hon. Friend, because he is normally so sensible, but on this occasion I have great difficulty in accepting the arguments that he put before the Committee.
Under Clause 41 as drafted, a society that converted to a bank would lose its immunity from takeover if it sought to take over any other financial institution. Under my hon. Friend's Amendment, as I understand it, the loss of immunity would be triggered only if the takeover was of a mutual institution, thereby leaving the new bank—the newly converted society—able to take over any other type of organisation without triggering the loss of its immunity.
As I made clear on Second Reading, I am very doubtful about the general principle of protection, because it would create two classes of public limited company: those that enjoyed protection because of the route that they followed—as a building society converting to a bank—and those that did not have the immunity, and could not because they had been a bank or some other institution for a considerable time. Therefore, a seriously uneven playing field would be created: between the newly converted society and the other banks with which it was competing, and also between the new bank that was formerly a society and the society that had not converted. We should not seek to enshrine that unevenness in legislation.
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