FSA wants stronger risk management at building societies

Confidence in both corporate and private banking could rise after the Financial Services Authority (FSA) has revealed plans to strengthen the risk management procedures of building societies.

From April 1st, those that do not meet the benchmarks set by the FSA will face inflexibility regarding how they operate.

If their risk management procedures and managerial skills are not robust enough, the independent, non-governmental body will ask the building society to move to a simpler business model.

This is because, the FSA noted, some building societies are diversifying without having the appropriate skills and risk management in place.

Organisations that do meet its expectations will be allowed to enjoy greater flexibility as to how they operate, so long as they comply with the Building Societies Act.

’The FSA expects building societies to re-examine their risk management and business models in the areas of liquidity, wholesale funding and lending to ensure that they are aligned,’ it said.

Statutory powers are granted to the FSA under the Financial Services and Markets Act 2000.ADNFCR-2318-ID-19693771-ADNFCR