The Building Societies (Designation of Qualifying Bodies) Order 1992

Meaning of lending certification condition for appropriate lending vehicles

5.—(1) In this Schedule “the lending certification condition for appropriate lending vehicles” means a condition to the effect that where a society holds shares or corresponding membership rights in an appropriate vehicle—

(a) the society shall for each financial year of the appropriate vehicle ending more than 18 months after the aquisition of such shares or corresponding membership rights seek to obtain within four months after the end of that year a certificate signed by a director of the appropriate vehicle stating that throughout that year the appropriate vehicle complied with the determined requirements, and

(b) if no such certificate is so obtained by the society for two successive financial years of the appropriate vehicle, the society shall dispose of its shares or corresponding membership rights, as the case may be, in that appropriate vehicle as soon as it is conveniently practicable to do so without undue loss.

(2) In sub-paragraph (1)(a) above “the determined requirements” means the following requirements—

(a) a requirement that the appropriate vehicle shall maintain a system for ensuring (or shall satisfy itself that adequate arrangements are made for ensuring) the safe custody of all documents relating to the arrangement referred to in paragraph 3 above or otherwise relating to land which is mortgaged to the appropriate vehicle;

(b) a requirement that the arrangements made for assessing the adequacy of the security for any advance to be directly or indirectly secured on land which is to be made by the appropriate vehicle shall be such as may reasonably be expected to ensure that—

(i) an assessment will be made on the occasion of each advance;

(ii) each assessment will be made by a person holding office in or employed by the appropriate vehicle who is competent to make the assessment and is not a person disqualified from assessment;

(iii) each person making the assessment will have furnished to him a written report on the value and, as appropriate, the expected value of the land at that time and any factors likely materially to affect its value made by a person who is competent to value the land in question and who is not a person disqualified from valuation, and

(iv) no authorisation of any advance will be made by a person disqualified from assessment.

(3) For the purposes of sub-paragraph (2)(b) above—

(a) in relation to any land which is to secure an advance where the advance is to be made following a disposition of the land, the following persons are persons disqualified from assessment, that is to say—

(i) any person, other than the appropriate vehicle making the loan, having a financial interest in the disposition of the land and any director, other officer or employee of his or of an associated employer; and

(ii) any person receiving a commission for introducing the parties to the transaction involving the disposition and any director, other officer or employee of his; and

(b) in relation to any land which is to secure an advance, the following persons are persons disqualified from valuation, that is to say—

(i) the directors and any other officer or employee of the appropriate vehicle who makes assessments of the adequacy of securities for advances by the appropriate vehicle or who authorises the making of such advances;

(ii) where the appropriate vehicle has made, or undertaken to make, to any person a payment for introducing to it an applicant for the advance, that person;

(iii) where the advance is to be made following a disposition of the land, any person having a financial interest in the disposition of the land and any director, other officer or employee of his or of an associated employer; and

(iv) where the advance is to be made following a disposition of the land, any person receiving a commission for introducing the parties to the transaction involving the disposition and any director, other officer or employee of his.

(4) For the purposes of sub-paragraph (3) above—

(a) any two employers are associated if one is a body corporate of which the other (directly or indirectly) has control or if both are bodies corporate of which a third person directly or indirectly has control; and the expression “associated employer” shall be construed accordingly;

(b) “commission” includes any gift, bonus or benefit; and

(c) a person shall be taken to have a financial interest in the disposition of any land if, but only if, he would, on a disposition of that land, be entitled (whether directly or indirectly, and whether in possession or not) to the whole or part of the proceeds of the disposition.