Building Societies Act 1986(redirected from Building Societies Act)
Building Societies Act 1986
Building Societies Act 1986a UK Act which consolidated earlier legislation in respect of the legal framework governing the activities of BUILDING SOCIETIES and, importantly, extended their powers to provide a range of financial services beyond that of providing principally MORTGAGE loans. In effect, the Act has opened the door to societies to engage in the provision of an extensive package of financial services for their clients in competition with the COMMERCIAL BANKS and other financial institutions, including money transmission facilities (via cheque books and cheque cards), foreign exchange (via travellers cheques and foreign currencies), and buying and selling of shares and other securities, the management of UNIT TRUST schemes for pensions and PERSONAL EQUITY PLANS, arranging all kinds of INSURANCE, and the provision of estate agency facilities, surveying and valuation services.
The Act established an authority, the Building Societies Commission, to regulate the sector, replacing the Registrar of Friendly Societies in this capacity In the past the larger building societies have expanded their mortgage business by merger with, and takeover of, other building societies while retaining their ‘friendly society’ status (i.e. being owned by their subscribing members). In addition to widening the scope of their business, the 1986 Act also permitted building societies to increase their capital resources and growth potential by incorporating themselves as JOINT-STOCK COMPANIES, (as have the Abbey National and the Halifax) issuing shares to the investing public and securing a listing on the stock exchange.
Building Societies Act 1986a UK Act that gave BUILDING SOCIETIES new powers to augment their traditional business MORTGAGES by providing a range of other financial services for their customers. These include money transmission facilities (via cheque books), arranging insurance cover, obtaining traveller's cheques and foreign currencies, managing unit trust pension schemes, buying and selling stocks and shares, and the provision of estate agency facilities. The Act has thus served to increase competition in the provision of financial services as between building societies, the COMMERCIAL BANKS and other financial institutions.
The Act also permits building societies to increase their capital resources and growth potential by incorporating themselves as JOINT-STOCK COMPANIES (as have the Abbey National and the Halifax), issuing shares and securing a stock exchange listing.