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From 26 March 2015, building societies will be able to create floating charges. What will these changes mean in practice?
Financial Services (Banking Reform) Act 2013 (Commencement (No 8) and Consequential Provisions) Order 2015: A provision in the Financial Services (Banking Reform) Act 2013 (FS(BR)A 2013) is commenced which allows UK building societies to create floating charges without a registration scheme and makes consequential provision in relation to this. It is coming into force on 26 March 2015.
The Financial Services (Banking Reform) Act 2013 (Commencement (No 8) and Consequential Provisions) Order 2015 brings into force FS(BR)A 2013, Sch 9, para 4 on 26 March 2015 and repeals the prohibition on building societies creating floating charges under Building Societies Act 1986, s 9B (BSA 1986). The effect of the changes is that building societies will be allowed to create floating charges and will not be obliged to register any such charge.
The Order also makes consequential amendments to the Building Societies (Financial Assistance) Order 2010,SI 2010/1188 and provides for the creation of floating charges by building societies in Scotland.
The government has recognised that the current prohibition on building societies creating floating charges (contained in BSA1986, s 9B) causes practical difficulties for building societies as floating charges are common place in the financial services industry and banks are not restricted in a similar manner. It is accepted that the original reason for introducing a ban on the creation of floating charges by building societies is no longer relevant given the changes in insolvency law in 2002. An interim measure, made under the Banking (Special Provisions) Act 2008 in response to the difficulties surrounding Northern Rock, enabled building societies to grant floating charges to the Bank of England or anyone acting on the bank’s behalf, in connection with the provision of financial assistance to them.
The impact assessment to this Order highlights the fact that the existing prohibition places building societies at a disadvantage as they are precluded from being off
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Neeta has been working as a paralegal in Banking and Insolvency for the past 4 and a half years.
She started her legal career at Allen & Overy in 2008 in the midst of the global financial crisis and the collapse of Lehmans where she gained most of her experience.
Neeta also did a short stint in litigation at the Revenue and Customs Prosecutions Office. Neeta graduated with a 2:1 honours degree from University of London, Queen Mary College and went on to obtain a distinction from the College of Law in the Legal Practice Course. She moved to Lexis®PSL in April 2013.
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