A bill to allow Building Societies to boost lending became one of the final pieces of legislation to make its way through Parliament ahead of the general election.  

The Building Societies Act 1986 (Amendment) Bill was part of the “wash up” today, which allows legislation to be passed quickly, before Parliament dissolves on 30 May to prepare for the 4 July national poll.     

The amendment was introduced as a private members bill by Labour MP Julie Elliott in December to “level the playing field” between mutuals and banks.  

The original bill was passed almost four decades ago, and at the time limited the portion of cash building societies could raise from money markets to 20%, with the rest from their members.   

This has been gradually lifted and now stands at 50%.  

Elliott’s amendment keeps this limit but excludes three types of funding from the calculation, which in effect allows mutuals to raise more cash from outside sources.  

These cover:  

• Funds accessed from the Bank of England in stress scenarios  
• Forms of loss-absorbing debt building societies may hold to ensure that, should the business fail, investors rather than taxpayers bear losses  
• Sale and repurchase agreements for types of liquid assets building societies hold as capital buffers  

Building Societies Association chief executive Robin Fieth says: “The new act will help level the playing field for the UK’s building societies and give them the capacity to lend more into the economy.   

“It’s high time the 1986 act was updated to reflect the needs of today’s economy. The changes brought in by this new act will drive greater competition in the mortgage market, which will give mortgage customers more choice, and support a healthy marketplace.”