On 3 June 2024, the Building Societies Act 1986 (Amendment) Act 2024 (the Act) was published.

The Act will enable building societies across the UK to raise more funds from sources other than member savings and brings some administrative rules in line with those which apply to banks.

When the Building Societies Act 1986 (1986 Act) was passed, the funding limit was set at 20%, meaning at least 80% of society funds had to come from customer savings. This was gradually increased and now sits at 50%. The Act does not propose changing the 50% figure but does propose excluding three types of funding from the calculation:

  • Funds accessed from the Bank of England in stress scenarios.
  • Types of loss-absorbing debt building societies might hold to ensure that, should the society fail, investors rather than taxpayers bear the loss.
  • Sale and repurchase agreements for types of easily-monetised assets building societies must hold for liquidity reasons.

The Act also changes the 1986 Act in ways that would allow real-time virtual participation in annual general meetings and paves the way for reducing the administrative burden with executing documents.

The Act comes into force at the end of the period of two months beginning with the day on which it is passed.