UK Offence Report

The Building Societies (Commercial Assets and Services) Order 1988

UK Statutory Instrument 1988 No. 1141 — creates 1 criminal offence.

1offences created
0recorded in force
0revoked
Made
30 June 1988
In force from
30 August 1988
Extent
Not stated
Subject
Corporate, financial services, company law, employment, charity, electoral and tax
Made under
Building Societies Act 1986

Explanatory note

(This note is not part of the Order) — published with the instrument by the department that made it. © Crown copyright, reused under the Open Government Licence v3.0.

This Order empowers building societies to acquire, hold and dispose of four additional forms of commercial asset, and varies Schedule 8 to the Building Societies Act 1986 to increase the range of services which may be provided by societies. Article 3 of and Schedule 1 to the Order extend the forms of property which a building society may acquire, hold and dispose of as Class 3 assets for the purposes of the commercial asset structure requirements of section 20 of the Act to include residual mortgage debts (on reacquisition of mortgages previously transferred by the society), rights under instruments relating to mortgages, personal property for leasing and rights arising from lending for bridging purposes, subject in the case of each type of asset to conditions and restrictions. Article 3(3) specifies how these assets are to be valued for the purposes of section 20, and article 4 and Schedules 2, 3 and 4 make consequential amendments to take the value of such assets where relevant into account in calculating the limits on mobile home loans under section 15, loans to individuals under section 16 and accounts under the Building Societies (Limited Credit Facilities) Order 1987. Article 5 varies Schedule 8 to the Act by replacing it with a new Schedule (Schedule 5 to the Order) which extends the range of services which building societies may provide. Part I of Schedule 8 formerly defined in more specific terms those services which societies might adopt power to provide. The services previously specified were money transmission and foreign exchange, making or receiving payments as agents, managing mortgage investments and land, arranging for services relating to the acquisition or disposal of investments, giving investment advice, arranging for the provision of units in unit trust schemes, establishing and managing personal equity plans, arranging credit agreements, establishing and managing unit trust schemes for the provision of pensions, establishing and administering pension schemes, arranging and giving advice as to insurance, providing land surveys and valuations, estate agency and conveyancing services. Part II of Schedule 8 formerly comprised the restriction repeated on the provision of services abroad, and Part III contained further restrictions on particular services. In the revised Schedule 8 as set out in Schedule 5 to the Order, the services which may be provided are described in Part Ii n terms largely following section 34(11) of the Act as banking services, investment services, insurance services, trusteeship, executorship and land services. Within this framework societies may provide any service which is not specifically restricted in the Schedule. Part II confines the power to provide services within the categories in Part I to services which are outside the scope of other provisions of the Act. Thus the power to make advances and loans, which is governed by Part III of the Act and forms part of the asset classification system in that Part, is excluded from the new powers in Schedule 8. Other powers similarly excluded (or excluded to a significant extent) are deposit-taking, acquisition of land or third party debts, acquisition and holding of shares or other commercial assets permitted under section 19 (including those covered by article 3 of this Order), acquisition of other investments and underwriting risks. Where a power exists independently of Schedule 8, and a power under Schedule 8 overlaps the existing power, restrictions contained in the Schedule do not apply to the original power. For example, Section 17 allows a building society to hold and develop land as a commercial asset, subject to the conditions specified in that Section. Paragraph 4(h) of Part III of the new Schedule restricts the development of land to land which belongs to a local authority or development corporation or which is charged in favour of the developer to secure repayment of the costs of development, but this restriction has no application where a society is exercising power under section 17 to develop its own land. Part III of Schedule 5 contains restrictions on individual services or elements of them. For example, specified banking services may be provided only to individuals. Services such as the administration of share issues, managing investments, establishment of personal equity plans and collective investment schemes, removal and storage of furniture, and management or development of land may only be provided by a building Society which has a qualifying asset holding. A society has a qualifying asset holding where the aggregate value of its total commercial assets is not less than £100 million. Management or development of land is also restricted to land which is to be used primarily for residential purposes. Part IV contains supplementary provisions relating to the scope of the powers to provide services as they apply both generally and in relation to specific services.

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