Yorkshire BS announces takeover of N&P
Yorkshire Building Society has announced details of its takeover of Norwich & Peterborough Building Society.
Subject to approval from both organisations and the FSA, the combined society will operate under Yorkshire Building Society, with N&P remaining a separate brand.
Details of the merger come just days after N&P was fined £1.4 million by the FSA for the mis-selling of Keydata products. It has also promised to compensate customers a total of £51 million.
Expected to complete in November, the enlarged society will have 224 branches and three million members. The YBS brand will continue to offer its traditional stable of residential mortgages and savings.
Under the Financial Services Compensation Scheme rules, savers are limited to a deposit protection allowance of £85,000 per individual per banking group. This means that if the merger goes ahead a saver with £50,000 in N&P and £50,000 in YBS will only receive £85,000 in compensation, not their full £100,000, should the building society fail.
Commenting on the merger, Iain Cornish, chief executive of the YBS, says: "We will build on N&P's strong brand and the value it has delivered to its members, while gaining the opportunity to consider developing our own products in areas where N&P has complementary capabilities and expertise, such as the current account market."
This article was written for our sister site Money Observer
The practice of a dishonest salesperson misrepresenting or misleading an investor about the characteristics of a product or service. For example, selling a person with no dependants a whole-of-life policy. There have been notable mis-selling scandals in the past, including endowment policies tied to mortgages, employees persuaded to leave final salary pensions in favour of money purchase pensions (which paid large commissions to salespeople) and payment protection insurance. There is no legal definition of mis-selling; rather the Financial Services Authority (FSA) issues clarifying guidelines and hopes companies comply with them.
The Financial Services Authority is an independent non-governmental body, given a wide range of rule-making, investigatory and enforcement powers in order to meet its four statutory objectives: market confidence (maintaining confidence in the UK financial system), financial stability, consumer protection and the reduction of financial crime. The FSA receives no government funding and is funded entirely by the firms it regulates, but is accountable to the Treasury and, ultimately, parliament.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.