Explanatory Note
(This note is not part of the Order)
This Order varies Schedule 8 to the Building Societies Act 1986, which specifies financial services and services relating to land which building societies may provide (in some cases only through subsidiaries) and restrictions which apply in relation to the provision of particular services.
The power of societies to arrange for the provision of services relating to the acquisition or disposal of investments is made subject to an additional restriction, set out in article 3(2) of the Order. A society is not to be able, in the course of providing this service, either to buy or sell an investment itself or to give advice concerning a particular investment.
A restriction which appears in Schedule 8 concerning the powers of societies to arrange for the provision of credit by third parties is varied by article 3(3). Societies are enabled to make arrangements not only with recognised banks, licensed deposit-takers and bodies approved by the Building Societies Commission in relation to all societies or classes of society, as hitherto, but also with certain connected bodies and bodies approved by the Commission in relation to the society concerned.
Article 3(4) imposes an additional restriction regarding the power of societies to provide estate agency services. While such services may be provided through a subsidiary which undertakes other business besides estate agency work (as defined in the Estate Agents Act 1979 (c. 38)), the business of an estate agency subsidiary must not include any activity which is outside the powers of its parent society, either because of the society`s failure to adopt a power or because of a restriction of certain kinds upon the extent of a power it has adopted. Article 4 of the Order makes an exception in the case of newly-acquired estate agencies, which will give a society an opportunity to adopt additional powers or to vary or remove restrictions upon its powers that the society has assumed.
Article 3(4) also varies the restriction in Schedule 8 which prohibits employees of a society from acting as agent for an estate agency subsidiary. In consequence, the prohibition will apply to any service which an employee undertakes for the subsidiary, but will not apply in relation to employees who do not have responsibilities relating to the society`s mortgage lending business.