Nationwide faces £237m hit for compensation scheme
Nationwide Building Society faces paying as much as £250 million into the UK financial compensation scheme.
Following a year when the Financial Services Compensation Scheme (FSCS) has been called on to cover payments to savers at Bradford & Bingley, the Icelandic banks and London Scottish Bank, the building society has been called to increase its contributions.
Nationwide's FSCS levy has also been raised by its acquisition of two rivals Derbyshire and Cheshire.
A Nationwide spokesperson said: "We regard this cost which is ultimately borne by our members as an unfortunate consequence of the FSCS.
"The basis of allocation of the levies has a disproportionate and inequitable impact on low risk, predominantly retail funded institutions generally, and building societies in particular, and we have lobbied the tripartite authorities to amend the scheme to reflect a more appropriate basis of allocation."
Other building societies have also reported hits to profits following increased FSCS contributions, with Skipton and Norwich & Peterborough reporting profits being halved.
The Building Societies Association (BSA) has hit out at the charges, claiming mutuals are being forced to pay for the mistakes of riskier banks.
"This will be a big hit for buildings societies and a big hit for their members," said Rachel Le Brocq at the BSA.
"Societies might have to widen their margins on products to pay the levy and so there could be less competitive products available for members."
The BSA is calling for a more equitable system where a firm's risk profile determines their contributions to the FSCS.
Earlier this month, MP Ann Cryer called on the government to bring in a fair system of funding for depositor protection.
In an early day motion, which attracted signatures from over 150 MPs, claimed building societies' share of the FSCS levy was the equivalent to about 15 per cent of the sector's pre-tax profit for 2007-08.
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