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The Building Societies (Designation of Qualifying Bodies) (No. 2) Order 1993

S.I. 1993/989 · Made 1 April 1993

Original text. legislation.gov.uk does not revise statutory instruments, so later amendments are not shown here. Changes made to it are listed under each provision when known.

BUILDING SOCIETIES

Made 1st April 1993

Laid before Parliament 2nd April 1993

Coming into force 1st May 1993

The Building Societies Commission, with the consent of the Treasury, in exercise of the powers conferred on it by section 18(2)(c) of the Building Societies Act 1986f1, and of all other powers enabling it in that behalf, hereby makes the following Order:

Annotations to the whole text

Footnotes

f1

1986 c. 53.

Contents

  1. 1Title and commencement
  2. 2Interpretation
  3. 3Designation of bodies corporate
  4. Signature
  5. Schedule
  6. IDESCRIPTION OF DESIGNATED BODY CORPORATE
  7. Part II: INTERPRETATION
  8. 1Meaning of standard asset provision
  9. 2Meaning of specified type of body corporate
  10. 3Meaning of single tier organisation
  11. 4Meaning of carrying on mortgage indemnity insurance business
  12. 5Meaning of the ownership condition
  13. 6Specification of particular restrictions for mortgage indemnity insurance bodies
  14. 7Meaning of candidate for authorisation
  15. Explanatory note

1Title and commencement

This Order may be cited as the Building Societies (Designation of Qualifying Bodies) (No. 2) Order 1993 and shall come into force on 1st May 1993.

2Interpretation

In this Order, except where the context otherwise requires—

  • “the Act” means the Building Societies Act 1986;

  • “body” means a body corporate of the description specified in column 1 of Part I of the Schedule to this Order;

  • “the relevant power”, in relation to a body, means the power for the exercise of which, as specified in column 3 of Part I of the Schedule to this Order, that body is designated as suitable, and

  • “society” means a building society.

3Designation of bodies corporate

(1)

Each body corporate of the description specified in column 1 of Part I of the Schedule to this Order is designated for the purposes of section 18 of the Act (power to invest in subsidiaries and other associated bodies) and within that Part of that Schedule—

(a)

the corresponding item in column 2 specifies, where a body corporate comes within the description so specified, the meaning of that description for the purposes of this Order;

(b)

the corresponding item in column 3 specifies that the body is designated as suitable for investment and support (but not for support only);

(c)

the corresponding item in column 4 specifies the purposes for which (in addition to the purposes permitted by section 18(4) of the Act) the exercise of the relevant power by a society is permitted in relation to that body, and

(d)

the corresponding item in column 5 specifies the conditions subject to which the exercise of the relevant power by a society is permitted in relation to that body.

(2)

Part II of the Schedule to this Order shall have effect—

(a)

so as to supplement Part I thereof, and

(b)

in respect of interpretation of that Schedule.

Signature

In witness whereof the common seal of the Building Societies Commission is hereto fixed, and is authenticated by me, a person authorised under paragraph 14 of Schedule 1 to the Building Societies Act 1986, on 1st April 1993.

L.S.

Norman Digance

Secretary to the Commission

We consent to this Order,

Irvine Patnick

Tim Wood

Two of the Lords Commissioners of Her Majesty’s Treasury

1st April 1993

IDESCRIPTION OF DESIGNATED BODY CORPORATE

Column 1Column 2Column 3Column 4Column 5
Specified descriptionSpecified definitionSpecified relevant powerSpecified purposesSpecified conditions
Mortgage indemnity insurance body

A specified type of body corporate (not being one excluded by the particular restrictions for mortgage indemnity insurance bodies) which is a single tier organisation formed for the purposes of, or the objects of which include, carrying on in any member State or in any country or territory listed in paragraph 2(c) of Part II of the Schedule hereto, any or all of the following activities—

  1. (i)

    mortgage indemnity insurance business;

  2. (ii)

    investment of premiums which have been obtained by the body in the course of carrying on mortgage indemnity insurance business;

  3. (iii)

    entering into and effecting insurance contracts against risks incurred by the body in carrying on the activity referred to in (i) above;

  4. (iv)

    any activity which is ancillary or necessary for the purpose of carrying on any of the activities referred to in (i), (ii) and (iii) above.

Investment and supportEnabling the body to carry on any activity listed in column 2 for which purpose the body may be formed.The standard asset provision. The ownership condition.

1Meaning of standard asset provision

In this Schedule “the standard asset provision” means a condition to the effect that—

(a)

the relevant power is not available to a society which does not for the time being have a qualifying asset holding, but

(b)

the cessation of its availability does not require the disposal of any property or rights.

2Meaning of specified type of body corporate

In this Schedule “specified type of body corporate” means a body corporate which is—

(a)

a company or industrial and provident society,

(b)

a body corporate formed in a member State other than the United Kingdom,

(c)

a body corporate formed in any of the following countries or territories:

Austria, Finland, Iceland, Liechtenstein, Norway, Sweden, Switzerland, Isle of Man, Jersey, Guernsey and Alderney.

3Meaning of single tier organisation

In this Schedule “a single tier organisation” is a body which does not have the capacity to hold 5% or more of shares or corresponding membership rights in another body corporate, and any shares or corresponding membership rights which the body holds in another body corporate are held for the purpose of investing premiums which have been obtained for the purposes of carrying on mortgage indemnity insurance business.

4Meaning of carrying on mortgage indemnity insurance business

(1)

For the purposes of this paragraph—

  • “advance” means any advance which is secured on land situated in the United Kingdom or in any country or territory designated under section 14 (power to make advances secured on land overseas) of the Act;

  • “mortgagor” means any person to whom the society has made an advance;

  • “society” means any society which owns shares or corresponding membership rights in the body.

(2)

In this Schedule, “carrying on mortgage indemnity insurance business” means that the body enters into an agreement (“the agreement”) with a society whereby the body, subject to the conditions specified below, agrees to indemnify the society against loss incurred by the society.

(3)

For the purposes of sub-paragraph (2) above the conditions are that:

(i)

the loss arises following failure by a mortgagor to make due payment in respect of an advance, and

(ii)

the body pays the society the amount specified in the agreement following sale of the land in respect of which that advance has been made.

5Meaning of the ownership condition

In this Schedule “the ownership condition” means that all shares or corresponding membership rights in the body are owned by one or more societies.

6Specification of particular restrictions for mortgage indemnity insurance bodies

(1)

In this Schedule the “particular restrictions for mortgage indemnity insurance bodies” means that a body corporate is not a mortgage indemnity insurance body for a society where—

(a)

for the purpose of carrying on mortgage indemnity insurance business the body is neither authorised nor otherwise entitled to carry on such business in any member State nor in any country or territory listed in paragraph 2(c) above, nor (where applicable) a candidate for authorisation in any such State, country or territory, and

(b)

its business includes any prohibited activity.

(2)

For the purposes of sub-paragraph (1)(b) above, a prohibited activity means the following—

(i)

any activity which is not listed in column 2 of Part I of the Schedule to this Order as an activity for which purpose the body may be formed, or

(ii)

any activity which is not one for which purpose a society may invest in and support the body by virtue of section 18(4) of the Act.

7Meaning of candidate for authorisation

For the purposes of this Schedule a body corporate is “a candidate for authorisation” in respect of the carrying on of mortgage indemnity insurance business if it has been formed with a view to being authorised in that respect and is applying, or is taking steps to apply, for authorisation in that respect.

Explanatory note

(This note is not part of the Order)

1

This Order designates a description of body corporate as suitable for investment and support (but not for support only) by building societies under section 18 of the Building Societies Act 1986, so as to add “mortgage indemnity insurance body” as a further type of designated body.

2

A mortgage indemnity insurance body is a body corporate owned by one or more building societies formed in any member State, or in any of the following countries or territories: Austria, Finland, Iceland, Liechtenstein, Norway, Sweden, Switzerland, Isle of Man, Jersey, Guernsey and Alderney. The purposes for which the body may be formed include carrying on mortgage indemnity insurance business. Mortgage indemnity insurance business is defined to mean entering into insurance contracts with any society which has invested in the body, for the purpose of reducing risk of loss which may be incurred by that society in respect of that society’s mortgage lending business.

3

Investment is defined by section 18 of the Act as acquiring and holding shares or corresponding membership rights in and forming and taking part in forming bodies corporate. Support is defined by that section as provision of loans, grants, guarantees, services or property to bodies corporate.