The Building Societies (Designation of Qualifying Bodies) Order 1995

Explanatory Note

(This note is not part of the Order)

This Order designates a “financing body” as a description of body corporate designated as suitable for investment and support (but not for support only) by building societies under section 18 of the Building Societies Act 1986.

A financing body is a company or industrial and provident society, or a body corporate formed in any member State (other than the United Kingdom), the Channel Islands, the Isle of Man, Gibraltar, Iceland, Liechtenstein, Norway or Switzerland. The purposes for which it may be formed include acquiring, holding and disposing of (a) debts due from bodies corporate and unincorporate, and (b) shares and equivalent rights acquired in connection with loans either at the time the loan is advanced (up to a maximum value of 5% of the loan) or following a default or compromise. As well as for these purposes, a building society may invest in and support a financing body for the purpose of enabling it to take deposits.

This Order also amends the Building Societies (Designation of Qualifying Bodies) Order 1993 and the Building Socieities (Designation of Qualifying Bodies) (No. 3) Order 1993 to remove the restrictions on designated bodies carrying on a deposit-taking business in the United Kingdom, to add a restriction on designated bodies carrying on the business of trading in derivatives and to substitute a new definition of “market maker” (which has the same effect as the existing definition, based on provisions of the Finance Act 1986 (c. 41) which are prospectively repealed by the Finance Act 1990 (c. 29)). The Building Societies (Designation of Qualifying Bodies) Order 1993 is also amended to add companies and industrial and provident societies to the types of body which a building society may invest in and support under that Order.

A review of the cost of compliance with this Order has been undertaken and the resulting compliance cost assessment may be purchased from the Secretary, Building Societies Commission, 15 Great Marlborough Street, London W1V 2LL.