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Hinckley & Rugby Building Society’s share of the levy which bails out savers at failed banks and other financial institutions will soon top £1million.
The mutual has had to pay large sums to the Financial Services Compensation Scheme (FSCS), the safety net for customers of banks, insurers, credit unions, building societies and other providers authorised by the Financial Services Authority.
Since the credit crunch Hinckley & Rugby has had to consistently hand 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.
In October 2009 it gave the FSCS £239,000 and in 2010 the bill was £209,000. Last year the levy was £172,000 and on October 1 2012 Hinckley & Rugby had to give £175,000. It is expecting to make a provision in its 2012 accounts for a 2013 payment of £242,000 – taking the total to £1.037million.
Hinckley & Rugby chief executive Chris White told us: “To have had to pay more than a million pounds in just five years will be a rather unpleasant milestone to pass. And that is not the end of it – we anticipate the following year’s provision will be more than £360,000.
“Hinckley & Rugby is, of course, not alone in carrying this burden. All our fellow building societies in Leicestershire and elsewhere are in the same boat and we anticipate that between us we have now faced a bill of over £3m.”
Chris White said that while the FSCS safety net for savers was essential, the mutuals such as Hinckley & Rugby are paying huge sums whilst representing little of the risk. “It is a challenge to make a profit in this era of ultra-low interest rates whilst being a cautious lender and paying affordable but attractive savings rates.
“To see more than a million pounds of that walk out of the door to correct the errors of others is very frustrating. We – and by that I mean the organisation and the people who own it, our savers and borrowers – are paying dearly for those mistakes.”
