Explanatory note

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 “funding body” as a further type of designated body.

A funding body is a body corporate which is a subsidiary of a society and formed in any member State (other than the United Kingdom), any relevant British overseas territory (within the meaning of section 14 (power to make advances overseas) of the Act, or in any of the following countries: United States of America, Japan, Canada and Switzerland. The purposes for which it is formed include raising funds, holding assets equivalent to liquid assets held by building societies, entering into hedging contracts and lending money to the society which has invested in the funding body.

This Order also amends previous Orders made under section 18 of the Building Societies Act. The restriction that certain bodies designated by description (that is appropriate financial service vehicles, appropriate payment service vehicles, appropriate service vehicles and European financial service vehicles) may not lend money has been removed. Restrictions preventing certain designated bodies from investing in subordinate organisations which lend money have also been removed. The Building Societies (Designation of Qualifying Bodies) Order 1992 is amended to make provision for Scotland and countries outside the United Kingdom where an appropriate lending vehicle makes an advance which is indirectly secured on land. The Building Societies (Designation of Qualifying Bodies) (No. 2) Order 1992 is amended to remove the restriction that an appropriate holding vehicle must be a wholly-owned subsidiary of the society.