Reply to criticism of building societies

Press, Volume CXIV, Issue 33579, 6 July 1974, Page 7

Reply to criticism of building societies

Some members of Parliament who spoke during a debate on the Building Societies Amendment Bill on Wednesday evening displayed a sad ignorance of the facts, said the managing-director of the Canterbury Building Society (Mr H. F. Redmond) yesterday.

The Minister of Finance (Mr Rowling) was wrong in his contention that s6m had been lost by building society contributors during the last six years through forfeiture of their money, said ■Mr Redmond.

“Forfeited money is available to contributors, in terms of the rules of most terminating societies, up to three years after payments fall into arrears, and in the case of our society, there is no time limit,” he said. "The full value of a contributor’s funds are credited to him, less a nominal administration fee, and he resumes his ballot and other rights from where he left off.”

Mr Redmond denied the Minister’s statement that only one terminating society provided a right of withdrawal of a specified sum of money after a 10-year contribution period. Nearly all terminating societies made a refund at any time after two years, and in some cases earlier. Only one society specified the amount; the others refunded all contributions plus profits, which often

amounted to more than the sum specified bv that society. Everyone who remained a member until termination of a group was entitled to an interest-free loan plus the return of contributions and profits. This is far less of a lottery than the Governtn en t' s bonus bonds scheme,” Mr Redmond said. “Another M.P. said that the trustee status accorded certain permanent building societies gave them greater status than the terminating societies. Terminating societies invariably have more long-term capital than the permanents and this gives them far greater financial stability in spite of the absence of. trustee status.” Building societies were lending nearly as much as the State Advances Corporation — and 80 per cent of building society lending came from the terminating societies, said Mr Redmond.