Building Societies Act 1986

26 Power to levy contributions and to borrow money in event of insolvency. U.K.

F1 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F2 (2) If a participating institution becomes insolvent the Board shall levy contributions to the Fund for the purpose of making insolvency payments to investors at such level of investor protection as is provided for by section 27 and meeting the other expenses attributable to the insolvency.

(3) All institutions (other than the insolvent institution) which on the date of the insolvency are—

(a) authorised building societies; or

(b) European authorised institutions which, in accordance with Chapter I of Part II of the 1995 Regulations, are participating in the scheme established by the protective scheme provisions,

are liable to contribute to the Fund and are in the protective scheme provisions of this Part referred to as “contributory institutions”.

(4) If a participating institution becomes insolvent—

(a) the Board shall, subject to subsection (10) below, levy a contribution from each of the contributory institutions; and

(b) the amount of the contribution due from an institution shall be determined by applying to its share and deposit base a percentage determined by the Board for the purpose of the contributions levied to meet the expenses attributable to the insolvency.

(5) In determining the percentage to be applied under subsection (4) above to the share and deposit bases of contributory institutions, the Board shall have regard to the factors specified in subsection (6) below.

(6) Those factors are—

(a) the amount available to meet the expenses attributable to the insolvency from the contributions leviable from contributory institutions; and

(b) the amount of the expenses attributable to the insolvency at the level of investor protection provided for by section 27.]

(7) If it appears to the Board, as respects a [F3 participating institution] insolvency, that the contributions it has levied will be insufficient to make the insolvency payments to investors at the level of investor protection [F4 provided for by] section 27, the Board may levy further contributions under subsection (2) above from the [F5 contributory institutions].

(8) Contributions to the Fund shall be levied on a [F6 contributory institution] by the Board by service on [F7 the institution] of a notice specifying the amount (or further amount) due, which shall be paid by [F7 the institution] not later than twenty-one days after the date on which the notice is served.

[F8 (8A) Where—

(a) a notice under subsection (8) above is served on a contributory institution; and

(b) the amount specified in the notice remains unpaid after the period of twenty-one days mentioned in that subsection,

the Board shall as soon as practicable give written notice of that fact to the Commission.

(9) In relation to any contribution, the share and deposit base of an authorised building society is such amount as represents the aggregate of so much of the society’s liabilities as is referable to sums desposited with the society, or to shares in the society, as shown in the latest balance sheet sent to the Commission in accordance with section 81.

(9A) In relation to any contribution, the share and deposit base of a participating EEA institution is the difference between—

(a) such amount as represents the aggregate of so much of the institution’s liabilities as is referable to sums deposited with the institution, or (in the case of an Irish building society) to shares in the institution, as shown in the latest balance sheet sent to the supervisory authority in its home State; and

(b) the amount mentioned in subsection (9B) below.

(9B) The amount referred to in subsection (9A) above is the amount given by the formula—

where—

PA = so much of the first-mentioned amount as is attributable to desposits which are protected by the institution’s home State scheme;

HS = the level of protection (expressed in ecus) afforded by that scheme at the time as at which the balance sheet was drawn up, or the level of protection mentioned below, whichever is the less;

UK = the level of protection (so expressed) afforded by this Part of this Act at that time.]

(10) No [F9 contributory institution] shall be required to pay a contribution if, or to the extent that, the amount of that contribution, together with previous contributions levied under this section for the purposes of any [F10 participating institution] insolvency, after allowing for any repayments made to it under section 29, amounts to more than 0.3 per cent. of the [F11 institution’s] share and deposit base as ascertained for the purposes of the contribution in question.

(11) Nothing in subsection (10) above—

(a) shall entitle [F12 an institution] to repayment of any contribution previously made, or

(b) shall prevent the Board from proceeding to levy contributions from other [F13 contributory institutions] in whose case the limit in that subsection has not been reached.

(12) The Treasury may, after consultation with the Board, by order made by statutory instrument, amend subsection (10) above so as to substitute for the percentage for the time being specified in that subsection such other percentage as may be specified in the order.

(13) No order shall be made under subsection (12) above unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

(14) If, as respects a [F14 participating institution] insolvency, it appears to the Board desirable to do so for the purpose of facilitating the making of insolvency payments to investors, the Board may borrow temporarily for that purpose subject, however, to the limit imposed by subsection (15) below.

(15) The aggregate of the amounts outstanding in respect of the principal of and interest due on sums borrowed under subsection (14) above shall not at any time exceed the aggregate of the sums leviable at that time from [F15 contributory institutions] for the purposes of any insolvency.

(16) Any sums borrowed by the Board under subsection (14) above in respect of a [F16 participating institution] insolvency shall be repaid as soon as practicable after the contributions levied in respect of the insolvency have been paid by the [F17 contributory institutions].

(17) In this section “the level of investor protection”, in relation to insolvency payments to investors, means the proportion applicable for the purpose of calculating the amount of those payments under section 27.

Textual Amendments

F1 S. 26(1) omitted (1.7.1995) by virtue of S.I. 1995/1442, reg. 39(1) (with transitional and transitory provisions in regs. 53(2), 54(2))

F2 S. 26(2)-(6) substituted (1.7.1995) by S.I. 1995/1442, reg. 39(2) (with transitional and transitory provisions in regs. 53(2), 54(2))

F3 Words in s. 26(7) substituted (1.7.1995) by S.I. 1995/1442, reg. 39(3)(a) (with transitional and transitory provisions in regs. 53(2), 54(2))

F4 Words in s. 26(7) substituted (1.7.1995) by S.I. 1995/1442, reg. 39(3)(b) (with transitional and transitory provisions in regs. 53(2), 54(2))

F5 Words in s. 26(7) substituted (1.7.1995) by S.I. 1995/1442, reg. 39(3)(c) (with transitional and transitory provisions in regs. 53(2), 54(2))

F6 Words in s. 26(8) substituted (1.7.1995) by S.I. 1995/1442, reg. 39(4)(a) (with transitional and transitory provisions in regs. 53(2), 54(2))

F7 Words in s. 26(8) substituted (1.7.1995) by S.I. 1995/1442, reg. 39(4)(b) (with transitional and transitory provisions in regs. 53(2), 54(2))

F8 S. 26(8A)-(9B) substituted for s. 26(9) (1.7.1995) by S.I. 1995/1442, reg. 39(5) (with transitional and transitory provisions in regs. 53(2), 54(2))

F9 Words in s. 26(10) substituted (1.7.1995) by S.I. 1995/1442, reg. 39(6)(a) (with transitional and transitory provisions in regs. 53(2), 54(2))

F10 Words in s. 26(10) substituted (1.7.1995) by S.I. 1995/1442, reg. 39(6)(b) (with transitional and transitory provisions in regs. 53(2), 54(2))

F11 Words in s. 26(10) substituted (1.7.1995) by S.I. 1995/1442, reg. 39(6)(c) (with transitional and transitory provisions in regs. 53(2), 54(2))

F12 Words in s. 26(11) substituted (1.7.1995) by S.I. 1995/1442, reg. 39(7)(a) (with transitional and transitory provisions in regs. 53(2), 54(2))

F13 Words in s. 26(11) substituted (1.7.1995) by S.I. 1995/1442, reg. 39(7)(b) (with transitional and transitory provisions in regs. 53(2), 54(2))

F14 Words in s. 26(14) substituted (1.7.1995) by S.I. 1995/1442, reg. 39(8) (with transitional and transitory provisions in regs. 53(2), 54(2))

F15 Words in s. 26(15) substituted (1.7.1995) by S.I. 1995/1442, reg. 39(9) (with transitional and transitory provisions in regs. 53(2), 54(2))

F16 Words in s. 26(16) substituted (1.7.1995) by S.I. 1995/1442, reg. 39(10)(a) (with transitional and transitory provisions in regs. 53(2), 54(2))

F17 Words in s. 26(16) substituted (1.7.1995) by S.I. 1995/1442, reg. 39(10)(b) (with transitional and transitory provisions in regs. 53(2), 54(2))

Modifications etc. (not altering text)

C2 Ss. 24-26: power to repeal conferred (9.6.1997) by 1997 c. 32, s. 32(5)(a); S.I. 1997/1427, art. 2(g)