FSCS levy burden angers Hinckley & Rugby
The society is criticising how the Financial Services Compensation Scheme levy is calculated, with Hinckley & Rugby’s low risk approach to lending not being taken into account.
Thanks to the FSCS levy bill of £357,000 just paid – double 2012’s £175,000 – the society’s total contribution to the compulsory scheme in the past five years has topped £1.15m.
That £1.15m could have boosted savers’ interest rates across the society’s books by 0.25% for a whole year – a significant amount when savings rates generally are at historic lows.
Or the £1.15m could have enabled the society to take 0.25% off the mortgage interest paid by all borrowers for a year, helping more people and families including first time buyers.
Chris White, Hinckley & Rugby chief executive, said: “The scale of our mandatory contributions to a scheme that mops up after other bodies’ mistakes is staggering. Our relative share of this enormous bill bears no relation to the relative risk to our savers.
“We support the existence of the FSCS safety net, which gives welcome confidence to savers, but we argue that the share of the burden our customers shoulder is completely out of kilter with the nature of our activities.”
Year after year since the credit crunch Hinckley & Rugby has handed over six figure sums from the profit it makes which it could otherwise use to improve rates for savers and borrowers and invest in growing the mutually owned organisation.
White added: “It is not even that there is an end in sight – we anticipate 2014’s provision will need to be at least £350,000.
“Hinckley & Rugby is paying huge sums whilst representing little of the risk. Our mortgage arrears are £22,000 from a mortgage book of £442million.
“Whilst banks come under fire for the inadequacy of their capital base, we could double the size of our balance sheet and still be compliant with the rules.
“We are calling on the Government to level the playing field and make the big banks take a bigger, fairer slice of the bill.”
Hinckley & Rugby’s levy payments to the FSCS so far have been:
• 2009 £239,000
• 2010 £209,000
• 2011 £172,000
• 2012 £175,000
• 2013 £357,000