Speaking at the BSA annual conference in Manchester today, Robin Fieth, Chief Executive of the Building Societies Association called on the building society sector, regulators and policy-makers to think carefully about the future shape of the financial services sector.
One of the lessons from the financial crisis is that concentration risk is dangerous and that strength and competition come from diversity. It is a matter of concern, not just for the Building Society sector, but new entrants and other existing players that actions taken by policy makers and regulators are driving UK financial services inexorably down the path of sameness.
Deliberate action is required if we are to avoid the creation of an environment in which different business models, non-vanilla lending, and product innovation are seen as non-conforming and are treated with suspicion.
UK financial services must steer away from the ever increasing tendency towards corporate monoculture and barriers to entry for new players, driven amongst other things by requirements for rapid capital-raising, and the anti-competitive constraints on some non-plc entities in this area.
It is important too that the prospect, where it becomes increasingly difficult to deliver a great consumer experience because providers are so tied up in regulation that they cannot deviate from the script, does not become a reality.
"At this stage of post crisis regulatory repair we should be looking ahead to avoid the traps. But more than this to work to positively foster a financial services sector that is trusted and respected. An industry that puts customer interests first and is strong, diverse and vibrant with a strong mutual component.
"Building societies have an opportunity to secure a sustainable competitive advantage. Mutuality is not an ownership technicality nor is it rose-tinted, but a tried and tested business approach which has seen societies grow and flourish in times of plenty and times of crisis based on the reality that if you look after your customers then business and profit will follow."
The full speech can be viewed on the BSA website here
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