Legalize / United Kingdom / Public General Act

Building Societies Act 1986

Type Public General Act

Publication 1986-07-25

Last updated 2025-01-06

State In force

Department Statute Law Database

Source legislation.gov.uk

articles 16

Reform history JSON API

(3) Where the Commission has grounds under section 51(1) for giving a direction to a building society under subsection (2) of that section in relation to another body corporate this section also applies to information, documents or other material, or explanations of matters, which relate to the business of that other body.

(4) This section does not authorise any requirement in relation to information, documents or other material to be imposed on a connected undertaking of a building society unless that undertaking carries on business in the United Kingdom; but a requirement may be imposed under this section on a building society in relation to information, documents or other material in the possession or control of a connected undertaking outside the United Kingdom.

(5) Subject to subsection (4) above, the FCA and the PRA may by notice to a building society, or connected undertaking—

(a) require the society or undertaking to which it is addressed to furnish to it, within a specified period or at a specified time or times, such specified information as the it considers it needs for the purposes of its supervisory functions;

(b) require the society or undertaking to which it is addressed to produce to it, at a specified time and place, such specified documents or other material as the it considers it needs for the purposes of its supervisory functions;

(c) require the society or undertaking to which it is addressed to provide to it, within specified period, such explanations of specified matters as the it considers it needs for the purposes of its supervisory functions;

(d) require the society or undertaking to which it is addressed to furnish to it a report by an approved accountant or other person with relevant professional skill on, or on specified aspects of, information or documents or other material furnished or produced to the it .

(5A) Subject to subsection (4) above, any person authorised for the purpose by the FCA or the PRA (“an authorised officer”) may, on producing evidence of his authority, require a building society or connected undertaking—

(a) to furnish to him forthwith such specified information as the body which authorised the person considers it needs for the purposes of its supervisory functions;

(b) to produce to him forthwith such documents or other material as the body which authorised the person considers it needs for those purposes;

(c) to provide to him forthwith such explanations of specified matters as the body which authorised the person considers it needs for those purposes.

(6) Where by virtue of subsection (5)(a) to (c) above the FCA or the PRA has power , or by virtue of subsection (5A) above an authorised officer has power, to require the furnishing of any information, the production of any document or material or the provision of any explanation, by a building society or connected undertaking, the FCA, the PRA or the authorised officer (as the case may be) shall have the like power as regards any person who—

(a) is or has been an officer or employee or agent of the society or undertaking; or

(b) in the case of documents or material, appears to the FCA, the PRA or the authorised officer (as the case may be) to have the document or material in his possession or under his control.

(7) Where any person from whom production of a document or material is required under subsection (6) above claims a lien on the document or material, the production of it shall be without prejudice to the lien.

(8) Nothing in the foregoing provisions of this section shall compel the production by a relevant lawyer of a document or material containing a privileged communication made by him or to him in that capacity or the furnishing of information contained in a privileged communication so made.

(9) Where, by virtue of subsection (5), (5A) or (6) above, the FCA, the PRA or an authorised officer requires the production by a building society or connected undertaking or any other person of documents or material, the FCA, the PRA or the authorised officer (as the case may be) may—

(a) if the documents or material are produced, take copies of or extracts from them and require the person who produced them, or any other person who is a present or past director or officer of, or is or was at any time employed by, the building society or connected undertaking concerned, to provide an explanation of the documents or material; and

(b) if the documents or material are not produced, require the person who was required to produce the documents or material to state, to the best of his knowledge and belief, where the documents or material are.

(10) Any person who, when required to do so under this section, fails without reasonable excuse to furnish any information or accountant’s report, to produce any documents or material, or to provide any explanation or make any statement, shall be liable on summary conviction—

(a) to a fine not exceeding level 5 on the standard scale; and

(b) in the case of a continuing offence, to an additional fine not exceeding £200 for every day during which the offence continues.

(11) Any building society which furnishes any information, provides any explanation or makes any statement which is false or misleading in a material particular shall be liable, on conviction on indictment or on summary conviction, to a fine which, on summary conviction, shall not exceed the statutory maximum.

(12) Any person who knowingly or recklessly furnishes any information, provides any explanation or makes any statement which is false or misleading in a material particular shall be liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or both; and

(b) on summary conviction, to a fine not exceeding the statutory maximum.

(13) In this section—

“agent”, in relation to a building society or connected undertaking, includes its bankers, accountants, solicitors and auditors;

“approved”, in relation to an accountant or other person with relevant professional skill, means approved by the FCA or the PRA ;

“relevant lawyer” means a barrister, advocate, solicitor or other legal representative communications with whom may be the subject of a claim to professional privilege;

“specified” means specified in a notice or requirement under this section.

Confidentiality of certain information obtained by Commission

53

(1) Subject to the provisions of this section and section 54, no information obtained by or furnished to the Commission under or for the purposes of this Act and relating to the business of the building society or other body or its or their plans for future development or to any person who is or has been or has been appointed or, in the case of a director, nominated or proposed as, an officer of a building society or other body may be disclosed (otherwise than to an officer or employee of the recipient authority) except—

(a) with the consent of the body to which, or person to whom, the information relates and (if different) of the person who furnishes it to the Commission; or

(b) to the extent that it is information which is at the time of the disclosure, or has previously been, available to the public from other sources; or

(c) in the form of a summary or collection of information so framed as not to enable information relating to any particular body or person to be ascertained from it; or

(d) to the extent that it is information which is provided for the purpose, under any provision of this Act, of its being made (in whatever manner) available to the public.

(2) Nothing in subsection (1) above prohibits the disclosure of information—

(a) with a view to the institution of, or otherwise for the purposes of, any criminal proceedings, whether under this Act or otherwise;

(b) with a view to the institution of, or otherwise for the purposes of—

(i) any civil proceedings by or at the relation of or against the Commission or by the Investor Protection Board arising out of the discharge of their respective functions under this Act; or

(ii) any civil proceedings in which the Commission will have or has a right to be heard;

(c) in order to enable or assistthe Commission to discharge any of its functions under this Act or any Community obligation;

(d) in order to enable or assistthe central office to discharge any of its functions under this Act;

(e) in order to enable or assistany person appointed investigator under section 55 or inspector under section 56 to discharge his duties under that section;

(f) in order to enable or assistthe auditors of the society to discharge their duties to the Commission;

(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2A) As regards the disclosure of information with a view to the institution of, or otherwise for the purposes of, any proceedings in respect of the society under the Bankruptcy (Scotland) Act 1985 or the Insolvency Act 1986 , the disclosures permitted by subsection (2)(b) above do not include the disclosure of information relating to a person who (not being a director or other officer of the society) is or has been, to the knowledge of the Commission, involved in an attempt to secure the survival of the society as a going concern.

(3) If, in order to enable or assistthe Commission properly to discharge any of its functions under this Act or any such obligation, the Commission considers it necessary to seek advice from any qualified person on any matter of law, accountancy, valuation of property or other matter requiring the exercise of professional skill, nothing in subsection (1) above prohibits the disclosure to that person of such information as may appear to the Commission to be necessary to ensure that he is properly informed with respect to the matters on which his advice is sought.

(4) Nothing in subsection (1) above prohibits the disclosure of information—

(a) to the Treasury in circumstances where, in the opinion of the Commission, it is desirable or expedient that the information should be disclosed—

(i) in the interests of shareholders or depositors or in the public interest; or

(ii) with a view to the exercise by the Treasury of any of its functions under this Actand (in either case) the disclosure would, in its opinion, be in accordance with article 12(7) of the First Council Directive

; or

(b) to the Investor Protection Board in order to enable the Board to discharge any of its functions under the protective scheme provisions of Part IV.

(5) Nothing in subsection (1) above prohibits the disclosure of information to the Financial Services Authority in circumstances where, in the opinion of the Commission, it is desirable or expedient that the information should be disclosed with a view to facilitating the discharge—

(a) by the Commission, of any of its functions under this Act; or

(b) by the Authority of any of its functions under the Banking Act 1987 or as a supervisor of money market institutions;

nor does subsection (1) above prohibit further disclosure of the information by the Authority with the consent of the Commission and within the limits permitted by Part V of that Act other than section 84(5) so far as it relates to disclosure in the public interest.

(5A) Nothing in subsection (1) above prohibits the disclosure of information to the Bank of England where, in the opinion of the Commission, it is desirable or expedient that the information should be disclosed with a view to facilitating the discharge—

(a) by the Commission of any of its functions under this Act; or

(b) by the Bank of any of its functions;

nor does subsection (1) above prohibit further disclosure of the information by the Bank of England with the consent of the Commission.

(6) Nothing in subsection (1) above prohibits the disclosure of information, with the consent of the Treasury, to the Secretary of State or the Department of Economic Development in circumstances where, in the opinion of the Commission,

(a) it is desirable or expedient that the information should be disclosed in the interests of shareholders or depositors or, in the case of information for the Secretary of State, in the public interest; and

(b) disclosure is in accordance with article 12(7) of the First Council Directive.

(7) Nothing in subsection (1) above prohibits the disclosure of information to the Secretary of State or the Department of Economic Development in circumstances where, in the opinion of the Commission, it is desirable or expedient that the information should be disclosed with a view to facilitating the discharge—

(a) by the Commission, of any of its functions under this Act, or

(b) by the Secretary of State, of any functions of his under the Insurance Companies Act 1982, Part XIV of the Companies Act 1985, Part XIII of the Insolvency Act 1986, the Financial Services Act 1986 or Part II, III or VII of the Companies Act 1989;

(c) by the Department, of any of its functions under Articles 424, 425(2), 435, 437, 439(1) or 440(2) or (3) of the Companies (Northern Ireland) Order 1986 (appointment of investigators and requirement to produce documents) Part XII of the Insolvency (Northern Ireland) Order 1989,Part III of the Companies (Northern Ireland) Order 1990 or Part II or V of the Companies (No. 2) (Northern Ireland) Order 1990;;

nor does subsection (1) above prohibit further disclosure of the information by the Secretary of State or the Department with the consent of the Commission if the disclosure is made with a view to facilitating the discharge of any of the functions mentioned in paragraph (b) or, as the case may be, paragraph (c) above.

(8) Subject to subsection (9) below, nothing in subsection (1) above prohibits the disclosure of information to a prescribed regulatory authority in circumstances where, in the opinion of the Commission, it is desirable or expedient that the information should be disclosed—

(a) in the public interest, or

(b) in the interests of shareholders or depositors, or

(i) by the Commission, of any of its functions under this Act, or

(ii) by the regulatory authority, of any prescribed functions of the authority;

nor does subsection (1) above prohibit further disclosure of the information by a prescribed regulatory authority in prescribed circumstances, subject to prescribed conditions and with the consent of the Commission if the disclosure is made with a view to facilitating the discharge of any prescribed functions of the authority.

(9) The Commission, with the consent of the Treasury, may, by order designate public and other authorities as prescribed regulatory authorities for the purposes of subsection (8) above and an order under this subsection—

(a) shall specify the supervisory functions of prescribed regulatory authorities which are prescribed functions for those purposes;

(b) may restrict thecircumstances in which information may, by virtue of that subsection, be disclosed or further disclosed, whether by excluding any of paragraphs (a), (b) or (c) of that subsection or otherwise; and

and in that subsection “prescribed” means prescribed by an order under this subsection.

(10) The power to make an order under subsection (9) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(11) Nothing in subsection (1) above prohibits the disclosure to an overseas regulatory authority of information which relates to a building society which, or a building society’s connected undertaking which,—

(a) carries on or proposes to carry on any business in that country or territory, or

(b) has or proposes to acquire an interest in a body corporate which carries on or proposes to carry on in that country or territory any business corresponding to any business of a building society, or

(c) appears to the Commission to be associated with a body incorporated under the law of that country or territory or whose principal place is, or is proposed to be, in that country or territory,

if it appears to the Commission that the disclosure of the information would assist that authority in the discharge of its functions or would assist the Commission in the discharge of any of its functions under this Act.

(11A) Subsection (11) above does not apply in relation to disclosures to an overseas regulatory authority which is not a supervisory authority in another member State unless the Commission is satisfied that the authority is subject to restrictions on further disclosures at least equivalent to those imposed by this section and section 54.

(12) Subsection (11) above applies in relation to the disclosure of information which relates to any person who is or has been or has been appointed or, in the case of a director, nominated or proposed as an officer of a building society or other body in the case of which that subsection authorises the disclosure of information which relates to it as it applies to the disclosure of information which relates to the society or other body.

(12A) Nothing in subsection (1) above prohibits the disclosure of information to the persons specified in the first column of the following Table if, in the opinion of the Commission, it is desirable or expedient that the information should be disclosed with a view to facilitating the discharge—

(a) by the Commission, of any of its functions under this Act; or

(b) by that person of the functions specified in relation to him in the second column of that Table.

Person	Function
1 An inspector appointed under Part XIV of the Companies Act 1985 or Part XV of the Companies (Northern Ireland) Order 1986 or, so far as relating to offences involving securities of a company, section 177 of the Financial Services Act 1986.	Functions under that Part or, so far as so relating, that section.
2 A person authorised to exercise powers under section 84 of the Companies Act 1989.	Functions under that section, so far as relating to the breach of any law relating to companies.
3 A recognised clearing house (within the meaning of the Financial Services Act 1986).	Functions in its capacity as a clearing house recognised under the Financial Services Act 1986 so far as they are exercisable in relation to defaults or potential defaults by market participants.
4 A person approved under the Uncertificated Securities Regulations 1995 as an operator of a relevant system (within the meaning of those Regulations).	Functions as a person so approved so far as they are exercisable in relation to defaults or potential defaults by market participants.
5 A recognised supervisory body (within the meaning of Part II of the Companies Act 1989 or Part III of the Companies (Northern Ireland) Order 1990).	Functions in its capacity as such a body under that Part, or functions in relation to disciplinary proceedings against auditors.
6 A recognised professional body (within the meaning of section 391 of the Insolvency Act 1986 or Article 350 of the Insolvency (Northern Ireland) Order 1989).	Functions in its capacity as such a body under that Act or Order or functions in relation to disciplinary proceedings against insolvency practitioners (within the meaning of that Act or Order).
7 A supervisory authority in another EEA State.	Functions in its capacity as a supervisor of systems for the transfer of funds between credit institutions and their customers."

(13) Any person who discloses information in contravention of subsection (1) above shall be liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or both; and

(b) on summary conviction, to a fine not exceeding the statutory maximum.

(13A) Information which is disclosed to a person with a view to enabling, facilitating or assisting the discharge of any functions shall not be used otherwise than with a view to enabling, facilitating or assisting the discharge of those functions.

(13B) Any person who uses information in contravention of subsection (13A) above shall be liable on summary conviction to imprisonment for a term not exceeding three months or to a fine not exceeding level 5 on the standard scale or to both.

(14) In this section—

(15) Subject to subsection (15A) below,any reference in this section to enabling, facilitating or assisting the discharge of any functions is a reference to enabling, facilitating or assisting the discharge of those functions in relation to—

(a) a financial market; . . .

(b) persons carrying on the business of banking or insurance, Consumer Credit Act businesses or the business of providing other financial services; or

(c) persons involved in the operation of occupational pension schemes (within the meaning of the Pension Schemes Act 1993 or, in Northern Ireland, the Pension Schemes (Northern Ireland) Act 1993)

and in this subsection 'Consumer Credit Act business’ has the same meaning as in the Banking Coordination (Second Council Directive) Regulations 1992.

(15A) Subsection (15) above shall not apply to disclosures made by virtue of subsection (12A) above, or to disclosures made with a view to facilitating the discharge of any of the following functions, namely—

(a) functions of the Secretary of State under Part XIV of the Companies Act 1985, Part XIII of the Insolvency Act 1986 or Part II of the Companies Act 1989 or, so far as relating to the breach of any law relating to companies, under section 83 of the Companies Act 1989; or

(b) functions of the Department of Economic Development in Northern Ireland under Part XV of the Companies (Northern Ireland) Order 1986, Part XII of the Insolvency (Northern Ireland) Order 1989 or Part III of the Companies (Northern Ireland) Order 1990.

(16) Any reference in this section or section 54 to the Commission’s functions under this Act includes a reference to its functions under those Regulations.

Information disclosed to Commission from other sources

54

(1) If and in so far as it appears to the Secretary of State that the disclosure of any information will enable the FCA or the PRA better to discharge its functions under this Act (but not otherwise),—

(a) information obtained by the Secretary of State under section 447 or 448 of the Companies Act 1985 (inspection of companies’ books and papers) may be disclosed to the FCA or the PRA or further disclosed, notwithstanding the provision as to security of information contained in section 449 or that Act; and

(b) where the information is contained in a report made by inspectors appointed under section 431, 432 or 442 of the Companies Act 1985 (investigation of affairs or ownership of companies and certain other bodies corporate) the Secretary of State may furnish a copy of the report to the FCA or the PRA .

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Inspections, etc

Investigations on behalf of Commission

55

(1) If it appears to the FCA or the PRA desirable to do so for the purposes of its supervisory functions in relation to a building society, it may appoint one or more competent persons to investigate and report to it on the state and conduct of the business of the society concerned, or any particular aspect of that business.

(2) If a person appointed under subsection (1) above thinks it necessary for the purposes of his investigation, he may also investigate the business of any body corporate which is or has at any relevant time been a connected undertaking of the building society under investigation

(3) It shall be the duty of every officer, employee and agent of a building society or other body which is under investigation—

(a) to produce to the persons appointed under subsection (1) above all records, books and papers relating to the body concerned which are in his custody or power; and

(b) to attend before those persons when required to do so; and

(c) otherwise to give to those persons all assistance in connection with the investigation which he is reasonably able to give.

(4) Any officer, employee or agent of a building society or other body who—

(a) without reasonable excuse fails to produce any records, books or papers which it is his duty to produce under subsection (3) above, or

(b) without reasonable excuse fails to attend before the person appointed under subsection (1) above when required to do so, or

(c) without reasonable excuse fails to answer any question which is put to him by persons so appointed with respect to any building society or other body corporate which is under investigation,

shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.

(5) Any officer, employee or agent of a building society or other body who knowingly or recklessly furnishes to any person appointed under subsection (1) above any information which is false or misleading in a material particular, shall be liable—

(a) on conviction on indictment to imprisonment for a term not exceeding two years or to a fine or both; and

(b) on summary conviction to a fine not exceeding the statutory maximum.

(6) In this section—

(a) “agent”, in relation to a building society or other body whose business is under investigation, includes its bankers, its accountants and solictors and any persons, where they are not officers of the other body concerned, who are employed as its auditors;

(b) “the purposes of its supervisory functions”, in relation to the FCA or the PRA , has the same meaning as in section 52; and

(c) any reference to an officer, employee or agent of a building society or other body includes a reference to a person who has been but no longer is an officer, employee or agent of that society or other body.

Inspections and special meetings: general

56

(1) In the circumstances mentioned in subsection (2) below, the FCA and the PRA —

(a) may appoint one or more competent inspectors to investigate and report on the affairs of a building society, or

(b) may call a special meeting of a building society to consider its affairs, or

(c) may (either on the same or on different occasions) both appoint an inspector or inspectors and call a special meeting for those purposes;

and, in the circumstances mentioned in subsection (3) below, the investigation or consideration may extend to the affairs of any body corporate which is or at any relevant time has been a connected undertaking of the building society.

(1A) The FCA must consult the PRA before exercising the power in subsection (1).

(1B) The PRA must consult the FCA before exercising the power in subsection (1).

(2) The powers conferred by subsection (1) above may be exercised either—

(a) on the application of the requisite number of members of the society, or

(b) where no such application is made but the FCA or the PRA (as the case may be) is of opinion that an investigation should be held into the affairs of the society, or that the affairs of the society call for consideration by a meeting of its members.

(3) The powers conferred by subsection (1) above may be exercised in relation also to a connected undertaking of a building society either—

(a) where the application referred to in subsection (2)(a) above so requests, or

(b) where the application contains no such request but the FCA or the PRA (as the case may be) is of the opinion that it is necessary for the purposes of the investigation into or consideration of the affairs of the building society that the affairs of the connected undertaking should also be investigated or considered.

(4) Where the inspectors are of the opinion mentioned in subsection (3)(b) above in relation to a connected undertaking of a building society they may, with the consent of the body exercising its powers under subsection (1) , extend their investigation to the affairs of the connected undertaking and make their report accordingly.

(5) For the purposes of subsections (1) to (3) above the requisite number of members—

(a) in the case of a building society having more than 1,000 members, is 100, and

(b) in the case of any other building society, is one-tenth of the whole number of members of the society.

(6) The following provisions shall have effect where an application is made as mentioned in subsection (2)(a) above, that is to say—

(a) the application shall be supported by such evidence as the body to which the application was made may require for the purpose of showing that the applicants have good reason for requiring an investigation by inspectors or consideration by a special meeting, as the case may be, and that the applicants are not actuated by malicious, frivolous, vexatious or scandalous motives in their application;

(b) such notice of the application shall be given to the building society and, in a case where the investigation is to extend to its affairs also, to the society’s connected undertaking, as the body to which the application was made may direct;

(c) the body to which the application was made shall require the applicants to give security for payment of the costs of the investigation or meeting before the inspector is appointed or the meeting is called subject, in the case of the costs of an investigation, to an amount not exceeding the corresponding Companies Act limit; and

(d) as regards the expenses of or incidental to the investigation or meeting—

(i) in the case of an investigation (in whichever way instituted), the expenses shall be defrayed in the first instance by the body to which the application was made but without prejudice to its rights to contribution under section 57(10);

(ii) in the case of a meeting, the expenses shall be defrayed by the applicants, or out of the funds of the society, or by the members or officers or former members or officers of the society, in such proportions as the body to which the application was made may direct.

(7) Before the FCA or the PRA exercises its powers under subsection (1) above in a case falling within subsection (2)(b) above, it shall inform the building society of the action which it proposes to take and the grounds for that action, and the society shall, within 14 days of receiving the information, be entitled to give the body exercising its powers under subsection (1) an explanatory statement in writing by way of a reply.

(8) Where the FCA or the PRA proposes to exercise its powers under subsection (1) above in a case falling within subsection (3)(b) above, subsection (7) above shall apply in relation to the connected undertaking as it applies in relation to the society.

(9) Inspectors appointed under this section shall, in addition to having the powers which are necessary for or incidental to the discharge of their functions under this section, have the powers specified in section 57.

(10) Where a special meeting is called under this section—

(a) the body exercising its powers under subsection (1) may direct at what time and place the meeting is to be held, and what matters are to be discussed and determined at the meeting, and may give such other directions as it thinks fit with respect to the calling, holding and conduct of the meeting;

(b) the body exercising its powers under subsection (1) may appoint a person to be chairman at the meeting or, in default of such an appointment, the meeting may appoint its own chairman;

and the provisions of this subsection and any direction given under it shall have effect notwithstanding anything in the rules of the building society.

(11) In this section “the corresponding Companies Act limit”, in relation to security for the payment of the costs of an investigation, is £5,000 or such other sum as is specified for the time being in an order under section 431(4) of the Companies Act 1985 for the purposes of that section.

Inspections: supplementary provisions

57

(1) In this section—

“the body under investigation” means the building society whose affairs or, as the case may be, the building society whose affairs, and each connected undertaking of the building society whose affairs, are the subject of the investigation;

“the inspectors” means the persons appointed ... under section 56 to conduct the investigation;

“the investigation” means the investigation under section 56 which the inspectors have been appointed to hold;

and references to officers or to agents include past, as well as present, officers or agents (as the case may be) and “agents”, in relation to a building society or any connected undertaking of a building society, includes its bankers, its accountants and solicitors and its auditors.

(2) When the inspectors have been appointed it is the duty of all officers and agents of the body under investigation—

(a) to produce to the inspectors all documents and material of or relating to the body under investigation which are in their custody or power;

(b) to attend before the inspectors when required to do so, and

(c) otherwise to give the inspectors all assistance in connection with the investigation which they are reasonably able to give.

(3) If the inspectors consider that a person other than an officer or agent of the body under investigation is or may be in possession of information concerning its affairs, they may require that person to produce to them any documents or material in his custody or power relating to the body under investigation, to attend before them and otherwise to give them all assistance in connection with the investigation which he is reasonably able to give; and it is that person’s duty to comply with the requirement.

(4) The inspectors may examine on oath the officers and agents of the body under investigation, and any such person as is mentioned in subsection (3) above, in relation to the affairs of the body under investigation, and may administer an oath accordingly.

(5) An answer given by a person to a question put to him under the foregoing provisions of this section may be used in evidence against him.

(5A) However, in criminal proceedings in which that person is charged with an offence to which this subsection applies—

(a) no evidence relating to the answer may be adduced, and

(b) no question relating to it may be asked,

by or on behalf of the prosecution, unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of that person.

(5B) Subsection (5A) above applies to any offence other than—

(a) an offence under section 2 or 5 of the Perjury Act 1911 (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath);

(b) an offence under section 44(1) or (2) of the Criminal Law (Consolidation) (Scotland) Act 1995 (false statements made on oath or otherwise than on oath); or

(c) an offence under Article 7 or 10 of the Perjury (Northern Ireland) Order 1979 (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath).

(6) If an officer or agent of the body under investigation or any such person as is mentioned in subsection (3) above—

(a) refuses to produce any document or material which it is his duty under this section to produce, or

(b) refuses to attend before the inspectors when required to do so, or

(c) refuses to answer any question put to him by the inspectors with respect to the affairs of the body under investigation,

the inspectors may certify the refusal in writing to the High Court; and the court may thereupon inquire into the case and, after hearing any witnesses who may be produced against or on behalf of the alleged offender and after hearing any statement which may be offered in defence, may punish the offender in like manner as if he had been guilty of contempt of the court.

(7) The inspectors may, and if so directed by the body which appointed the inspectors shall, make interim reports to the body which appointed the inspectors , but they may at any time in the course of the investigation, without making an interim report, inform the body which appointed the inspectors of matters coming to their knowledge as a result of the investigation tending to show that an offence has been committed.

(8) The body which appointed the inspectors may, if it thinks fit—

(a) send a copy of any report made by the inspectors to the body whose affairs are or were the subject of the investigation;

(b) furnish a copy of any such report on request . . . to—

(i) any member of the body whose affairs are or were the subject of the investigation;

(ii) the auditors of that body;

(iii) any person whose conduct is referred to in the report;

(iv) any other person whose financial interests appear to the body which appointed the inspectors to be affected by matters dealt with in the report, whether as creditor or otherwise; and

(8A) The body which appointed the inspectors may charge a reasonable fee for furnishing to any person a copy of a report under subsection (8)(b) above.

(9) A copy of a report of inspectors appointed under section 56 to hold an investigation under that section, certified by the body which appointed the inspectors to be a true copy, is admissable in any legal proceedings as evidence of the opinion of the inspectors in relation to any matter contained in the report; and a document purporting to be such a certificate shall be received in evidence and be deemed to be such a certificate, unless the contrary is proved.

(10) The body which appointed the inspectors shall be entitled to be repaid the expenses of the investigation defrayed by it under section 56(6)(d) as provided in the following paragraphs, that is to say—

(a) by the applicants for the investigation, to such extent (if any) as the body which appointed the inspectors may direct;

(c) by any person convicted of an offence in proceedings instituted as a result of the investigation, to such extent (if any) as the court by or before which he was convicted may order;

and a person liable under any one of paragraphs (a) to (c) above is entitled to contribution from any other person liable under the same paragraph, according to the amount of their respective liabilities under it.

(11) In the application of this section to a building society whose principal office is in Scotland, any reference to the High Court shall be read as a reference to the Court of Session.

Part VII — Management of Building Societies

Directors and other officers

Directors: number

58

(1) Every building society shall have at at least two directors.

(2) One of the directors shall be appointed to be chairman of the board of directors.

Chief executive and secretary

59

(1) Every building society shall have a chief executive, that is to say, a person who is employed by the society and who either alone or jointly with one or more other persons, is or will be responsible under the immediate authority of the directors for the conduct of the business of the society.

(2) Every building society shall have a secretary.

(3) The offices of chief executive and secretary of a building society may be held by the same person.

(4) The chief executive and the secretary of a building society shall be appointed by the directors of the society.

(5) The directors of a building society shall, as regards the appointment of the secretary or the chief executive of the society, take all reasonable steps to secure that the person appointed is a person who has the requisite knowledge and experience to discharge the functions of his office.

(6) Where a person becomes or ceases to be the chief executive of a building society, the society shall within one month give notice of that fact to the FCA , stating the person’s full name and address and the date on which he became, or ceased to be, chief executive; and the FCA shall record the person’s name and the date on which he began to hold, or, as the case may be, ceased to hold office, in the public file of the society.

(7) Anything required or authorised to be done by or to the secretary or chief executive of a building society may, if the office is vacant or there is for any other reason no secretary or chief executive capable of acting, be done by or to any assistant or deputy secretary or assistant or deputy chief executive, as the case may be, or, if there is no assistant or deputy capable of acting, by or to any officer of the society authorised generally or specially for that purpose by the directors.

Directors: elections and retirement

60

(1) Except in so far as they may be co-opted by virtue of subsection (13) below, the directors of a building society must be elected to office, either—

(a) on a poll taken at the annual general meeting of the society, or

(b) by postal or electronic ballot of the members conducted during that part of the financial year of the society which precedes the date on which the annual general meeting is held,

as the rules provide.

(1A) Where directors of a building society are to be elected to office on a poll taken at the annual general meeting of the society, a form for the appointment of a proxy shall be sent to each person entitled to notice of the meeting.

(2) The persons entitled to vote in an election of directors of a building society are those members of the society who, on the voting date, are entitled to vote on an ordinary resolution of the society.

(3) Where, in the case of an election of directors of a building society, there are more candidates than vacancies to be filled by the election, a person entitled to vote in the election—

(a) shall have one vote in respect of every vacancy, but

(b) cannot be required to cast all or any of his votes.

(3A) Where, in the case of an election of directors of a building society, there are not more candidates than vacancies to be filled by the election—

(a) a person entitled to vote in the election shall have one vote in respect of every candidate, but cannot be required to cast all or any of his votes;

(b) each vote shall be capable of being cast either for or against the candidate concerned; and

(4) Subject to subsections (4A) ... and (9) below and to paragraph 5(3) of Schedule 2 to this Act, any natural person is eligible to be elected a director of a building society.

(4A) A person in relation to whom there is in force a prohibition order made under section 56(2) of the Financial Services and Markets Act 2000 shall not be eligible to be elected as a director of a building society.

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) The rules of a building society may impose, as a condition of a person’s eligibility to be or to remain a director of the society, a requirement that he shall hold beneficially shares in the society not less in value than the amount prescribed by the rules, but the minimum holding to be required shall not exceed £1,000 or such other amount as may be substituted for it by order of the Treasury under this subsection.

(10) The rules of a building society may impose, as conditions of the validity of a person’s nomination for election as a director, requirements as to—

(a) the minimum number of members who must join in nominating him,

(b) their qualifications as respects length of membership and the value of their shares or the amount of their mortgage debt;

but no other requirements; and rules made by virtue of this subsection must comply with section 61.

(10A) A nomination of a candidate for election as a director of a building society—

(a) may be made at any time; but

(b) if made after the closing date for the nomination of candidates for the next election of directors, shall be carried forward (unless the candidate otherwise requires) as a nomination for the next election of directors after that;

and in this subsection and section 61 “the closing date for the nomination of candidates”, in relation to an election of directors, means the last day of the last financial year to end before the voting date.

(11) A director of a building society shall retire from office—

(a) in any case not provided for by ... rules under section 61(10), at the third annual general meeting of the society following the date of his election, ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

subject ... to any provision for his earlier retirement on the grounds of ceasing to hold the requisite shares in the society contained in the rules of the society.

(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(13) If the rules of a building society so provide, the directors for the time being may appoint as additional directors or to fill any vacancy on the board of directors any person who—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) appears to them to be fit and proper to be a director.

not being a person who, having been nominated for election as a director at any election held within the preceding twelve months, was not elected as a director.

(14) A person who is co-opted under subsection (13) above shall cease to hold office at the end of the permitted period unless he is elected as a director of the society in accordance with this section within that period.

(15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(16) The power of the Treasury to make an order under subsection (9) above—

(a) includes power to make such transitional provision as they consider necessary or expedient, and

(b) shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(17) In this section—

“ordinary resolution” means a resolution which will be effective without being passed as a special resolution or borrowing members’ resolution;

“permitted period”, in relation to a co-opted director, has the meaning given by section 61(12); and

“the voting date” means—in the case of an election at a meeting, the date of the meeting, except where paragraph (c) below applies;in the case of an election conducted by postal ballot or by electronic ballot in the case of which not all the voting is electronic (within the meaning of paragraph 33A of Schedule 2), the date which the society specifies as the final date for the receipt of completed ballot papers;in the case of an election conducted by electronic ballot in which all the voting is electronic voting (within the meaning of that paragraph), the date which the society specifies as the final date for registering votes;in a case where a member appoints a proxy to vote at the meeting for him, the date which the society specifies as the final date for receipt of appointments of proxies to vote at the election;

and, for the purposes of this Act, the date of a person’s election to office as a director of a building society, in a case where the rules provide for election by postal or electronic ballot, is the date of the meeting at which the declaration of the result of the ballot is made.

Directors: supplementary provisions as to elections, etc.

61

(1) Rules made under section 60(10)(a), in order to comply with this section, must not require—

(a) in the case of a society whose total commercial assets do not exceed £100 million, more than 50 members;

(b) in the case of a society whose total commercial assets exceed £100 million but do not exceed £250 million, more than 100 members;

(c) in the case of a society whose total commercial assets exceed £250 million but do not exceed £1,000 million, more than 150 members;

(d) in the case of a society whose total commercial assets exceed £1,000 million but do not exceed £5,000 million, more than 200 members; and

(e) in the case of a society whose total commercial assets exceed £5,000 million, more than 250 members,

to join in nominating a person for election as a director.

(2) Rules under section 60(10)(b), in order to comply with this section, must not require a nominating member—

(a) to have been a member for more than two years before the date of the nomination; or

(b) if he claims eligibility as a shareholding member, to hold, or to have held at any time during that period, shares in the society to a value greater than £200; or

(c) if he claims eligibility as a borrowing member, to owe to the society, or to have owed to the society at any time during that period, a mortgage debt of an amount greater than £200.

(3) Rules made under section 60(10)(c), in order to comply with this section—

(a) must not require more than £500 to be deposited with the society;

(b) must not require the money to be deposited before the date which, under the rules, is the closing date for the nomination of candidates for the election; and

(i) not less than 5 per cent. of the total number of votes cast for all the candidates in the election; or

(ii) not less than 20 per cent. of the number of votes cast for the candidate who is elected with the smallest number of votes.

(3A) In subsection (1) above “total commercial assets”, in relation to a building society, means the difference between the total assets of the society as shown in the relevant accounts and the aggregate of—

(a) the liquid assets of the society as shown in those accounts in pursuance of regulations under section 72C or 72G, or in accordance with UK-adopted international accounting standards as appropriate; and

(b) the fixed assets of the society as so shown;

and in this subsection “the relevant accounts” means the accounts which, immediately before the closing date for the nomination of candidates, were the accounts last prepared by the society under section 72A or 72E and “liquid assets” and “fixed assets”, in the case of societies which produce IAS individual accounts or IAS group accounts, have the same meaning as given in section 6(16).

(4) The Treasury may, by order, substitute—

(a) for any amount or number specified in subsection (1) above;

(b) for any amount specified in subsection (2) above; or

such other amount, number or percentage as they think appropriate; and the Treasury may by order vary subsection (3A) above by adding to or deleting from it any provision or by varying any provision contained in it.

(5) The power to make orders under subsection (4) above—

(a) includes power to make such transitional provision as the Treasury consider necessary or expedient, and

(b) is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) If, before the closing date for the nomination of candidates, a duly nominated candidate for election as a director of a building society furnishes the society with an election address, or a revised election address, of not more than 500 words, then, subject to subsection (8) below—

(a) it shall be the duty of the society to send a copy of the address or, as the case may require, the revised address to each member of the society who is entitled to vote in the election;

(b) each member’s copy shall be sent in the same manner and, so far as practicable, at the same time as the notice of the meeting at which the election is to be conducted or the notice of the postal or electronic ballot is sent out, as the case may be, or as soon as is practicable thereafter; and

(c) if the building society fails to comply with the requirements of this subsection the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also liable for the offence;

but no such failure shall invalidate the election.

(7A) Subsection (7B) applies where, in a case in which—

(a) a society gives notice in accordance with paragraph 22A or 22B of Schedule 2 of the meeting at which the election is to be conducted;

(b) a society gives notice of a postal ballot by which the election is to be conducted by sending it electronically to an electronic address; or

the copy of the election address or revised election address that is required to be sent to a member under subsection (7)(b) is not transmitted or published at the same time as the notice.

(7B) The requirement of subsection (7)(b) to send a member his copy of the election address or revised election address in the same manner as the notice is satisfied if—

(a) a copy of the address or revised address is made available to the member in the same way as the notice; or

(b) such a copy (without being made available to the member in that way) is sent to the member in a manner set out by the society for the purpose in the notice.

(7C) Where a copy of an election address or revised election address is sent to a member electronically under subsection (7B), it must be sent to an electronic address notified by the member for the purpose.

(7D) The requirements of subsection (7)(b) or (7B)(a) are satisfied by the publication of a copy of the election address or revised election address on a web site only if—

(a) the notice of the election meeting or of the electronic ballot is a notice given to that member by being published on a web site;

(b) an agreement between the society and the member to his accessing information on a web site applies to copies of election addresses or revised election addresses for the meeting or ballot in question;

(i) the publication of a copy of the address or revised address on a web site,

(ii) the address of that web site, and

(iii) the place on that web site where the copy may be accessed, and how it may be accessed;

(d) the notification for the purposes of paragraph (c) above is given no later than the day after the date on which the copy of the election address or revised election address is first capable of being accessed on the notified web site; and

(e) that date was the same as the date on which the notice of the election meeting or of the electronic ballot was first capable of being accessed on a web site or (in a case to which subsection (7B) applies) was as soon as practicable after that date;

(f) a copy of the election address or revised election address is continuously published on the notified web site throughout the period beginning with the day on which it was first accessible on that site and ending with the voting date (within the meaning of section 60(17)).

(7E) Where, in a case in which subsection (7D) is relied on for compliance with a requirement under subsection (7)(b) or (7B)(a) above...—

(a) a copy is published for a part, but not all, of the period mentioned in subsection (7D)(f), but

(b) the failure to publish it throughout that period is wholly attributable to circumstances which it would not be reasonable to have expected the society to prevent or avoid,

the failure shall not invalidate the election of a director.

(8) Subsection (7) above does not require a building society to send copies of an address or a revised address to members of the society in any case where—

(a) publicity for the address or revised address would be likely to diminish substantially the confidence in the society of investing members of the public, or

(b) the rights conferred by that subsection are being abused to seek needless publicity for defamatory matter or for frivolous or vexatious purposes;

and that subsection shall not be taken to confer any rights on members, or to impose any duties on a building society, in respect of an address or a revised address which does not relate directly to the affairs of the society.

(9) The FCA shall hear and determine any dispute arising under subsection (8)(a) above, whether on the application of the society or of any other person who claims to be aggrieved.

(10) The rules of a building society, if they provide for the retirement by rotation of its directors, may provide that a person elected to fill a vacant seat on the board must retire at the annual general meeting at which, in accordance with the rules for retirement by rotation, the seat is to fall vacant.

(11) Subsection (10) above applies to any vacancy arising when an elected director ceases to hold office for any reason before the annual general meeting at which ... the seat is due to fall vacant under section 60(11)(a).

(12) For the purposes of section 60(17) “the permitted period”, with reference to the tenure of office of co-opted directors, is the period beginning with the date of the co-opted director’s appointment and ending with whichever of the following first occurs, that is to say—

(i) in the case of a building society which elects its directors at its annual general meeting, the conclusion of the next such meeting following his appointment;

(ii) in the case of a building society which elects its directors by postal or electronic ballot, the declaration at its annual general meeting of the result of the next such ballot conducted after his appointment;

(iii) the expiration of the period of sixteen months beginning with the date of his appointment;

but a general meeting or postal or electronic ballot shall be disregarded for the purposes of this paragraph if the closing date for the nomination of candidates falls before the date of the co-opted director’s appointment.

(13) Where a person becomes or ceases to be a director of a building society, the society shall within one month give notice of that fact to the FCA , stating the person’s full name and address and the date on which he became, or ceased to be, a director; and the FCA shall record the person’s name and the date on which he began to hold, or, as the case may be, ceased to hold office, in the public file of the society.

(14) If a building society fails to comply with subsection (13) above the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

Dealings with directors

Prohibition of tax-free payments to directors

62

(1) A building society shall not pay a director remuneration (whether as director or otherwise) free of income tax, or otherwise calculated by reference to or varying with the amount of his income tax, or to or with any rate of income tax.

(2) Any rule of a building society and any provision of any contract, or in any resolution of a building society, for payment to a director of remuneration falling within subsection (1) above has effect as if it provided for payment, as a gross sum subject to income tax, of the net sum for which the rule, contract or resolution actually provides.

Directors to disclose interests in contracts and other transactions

63

(1) It is the duty of a director of a building society who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the society to declare the nature of his interest to the board of directors of the society in accordance with this section.

(2) In the case of a proposed contract, the declaration shall be made—

(a) at the meeting of the directors at which the question of entering into the contract is first taken into consideration; or

(b) if the director was not at the date of that meeting interested in the proposed contract, at the next meeting of the directors held after he became so interested.

(3) Where the director becomes interested in a contract after it is made, the declaration shall be made at the first meeting of the directors held after he becomes interested in the contract.

(4) For the purposes of this section, a general notice given to the directors of a building society by a director to the effect that—

(a) he is a member of a specified company or firm and is to be regarded as interested in any contract which may, after the date of the notice, be made with that company or firm, or

(b) he is to be regarded as interested in any contract which may, after the date of the notice, be made with a specified person who is connected with him,

is a sufficient declaration of interest in relation to any contract made after that date with that company, firm or person.

(5) A director need not make a declaration or give a notice under this section by attending in person at a meeting of the directors if he takes reasonable steps to secure that the declaration or notice is brought up and read at the meeting.

(6) The foregoing provisions of this section apply in relation to any transaction or arrangement as they apply in relation to a contract and, for the purposes of this section, a transaction or arrangement of a kind described in section 65 made by a society for a director of the society or a person connected with a director of the society is to be treated (if it would not otherwise be so treated, and whether or not it is prohibited by that section) as a transaction or arrangement in which that director is interested.

(7) A director who fails to comply with this section shall be guilty of an offence and liable—

(a) on conviction on indictment, to a fine; or

(b) on summary conviction, to a fine not exceeding the statutory maximum.

Substantial property transactions involving directors and connected persons

64

(1) A building society shall not enter into an arrangement—

(a) whereby a director of the society, or a person connected with a director of the society, acquires or is to acquire one or more non-cash assets of the requisite value from the society; or

(b) whereby the society acquires or is to acquire one or more non-cash assets of the requisite value from a director of the society or a person connected with a director of the society,

unless the arrangement is first approved by a resolution of the society passed at a general meeting.

(2) For this purpose a non-cash asset is of the requisite value if at the time the arrangement in question is entered into its value is—

(a) except in a case falling within paragraph (b) below, not less than £200,000; and

(b) where the last balance sheet of the society showed reserves amounting to less than £1,000,000, not less than the higher of £2,000 or the amount which represents 10 per cent. of the reserves so shown.

(3) The Treasury may by order amend subsection (2) above so as to substitute for any of the amounts for the time being specified in paragraphs (a) and (b) of that subsection such other amount as they think appropriate.

(4) The power to make an order under subsection (3) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(5) In this section “non-cash asset” means any property or interest in property other than cash and a reference to the acquisition of a non-cash asset includes the creation or extinction of an estate or interest in, or a right over, any property and also the discharge of any person’s liability, other than a liability for a liquidated sum.

(6) An arrangement entered into by a building society in contravention of this section, and any transaction entered into in pursuance of the arrangement (whether by the society or any other person) is voidable at the instance of the society unless—

(a) restitution of any money or other asset which is the subject matter of the arrangement or transaction is no longer possible or the society has been indemnified in pursuance of subsection (7)(b) below for the loss or damage suffered by it, or

(b) any rights acquired in good faith, for value and without actual notice of the contravention by any person who is not a party to the arrangement or transaction would be affected by its avoidance, or

(c) the arrangement is affirmed by the society at a general meeting held not later than the next annual general meeting after the entry into the arrangement.

(7) Where an arrangement or transaction is entered into with a building society by a director of the society or a person connected with him in contravention of this section then, without prejudice to any other liability but subject to subsections (8) and (9) below, that director and the person so connected, and any other director of the society who authorised the arrangement of any transaction entered into in pursuance of such an arrangement, is liable—

(a) to account to the society for any gain which he has made directly or indirectly by the arrangement or transaction, and

(b) (jointly and severally with any other person liable under this subsection) to indemnify the society for any loss or damage resulting from the arrangement or transaction.

(8) Where an arrangement or transaction is entered into by a building society and a person connected with a director of the society in contravention of this section, that director is not liable under subsection (7) above if he shows that he took all reasonable steps to secure the society’s compliance with this section.

(9) In any case, a person so connected and any such other director as is mentioned in subsection (7) above is not so liable if he shows that, at the time the arrangement was entered into, he did not know the circumstances constituting the contravention.

Restriction on loans, etc. to directors and persons connected with them

65

(1) Subject to the following provisions of this section, a building society shall not—

(a) make a loan to a director or a person connected with a director of the society; or

(b) dispose of property by way of lease or hire to a director or a person connected with a director of the society; or

(c) make a payment on behalf of a director or a person connected with a director of the society in connection with the provision of any service of a kind which is provided by building societies for individuals in the ordinary course of business; or

(d) enter into a guarantee or provide any security which is incidental to or connected with any such loan, disposal of property or payment; or

(e) take part in any arrangement whereby—

(i) another person enters into a transaction which, if it had been entered into by the society, would have contravened any of paragraphs (a) to (d) above; and

(ii) that other person, in pursuance of the arrangement, has obtained or is to obtain any benefit from the society or a subsidiary of the society.

(2) Subsection (1)(a) above does not apply to—

(a) any loan of an amount which, when aggregated with any other relevant loans, does not exceed £10,000;

(b) any loan made in the ordinary course of the society’s business and of an amount not greater and made on other terms not more favourable than it is reasonable to expect the society to have offered to a person of the same financial standing but unconnected with the society; or

(c) any loan, the amount of which, when aggregated with any other relevant loans, does not exceed £200,000, made for or towards the purchase or improvement of a dwelling-house used or to be used as the director’s only or main residence if he is an executive director and loans of that description and on similar terms are ordinarily made by the society to its employees.

(3) Subsection (1)(b) above does not apply to—

(a) any lease or hiring of property the value of which, when aggregated with the value of any other relevant leases or hirings, does not exceed £20,000; or

(b) any lease or hiring made in the ordinary course of the society’s business and on terms not more favourable than it is reasonable to expect the society to have offered to a person unconnected with the society.

(4) Subsection (1)(c) above does not apply to—

(a) any payment amounting, when aggregated with any other relevant payment, to no more than £10,000 in respect of which the person on whose behalf it is made is under an obligation to reimburse the society within a period not exceeding two months beginning with the date of the payment; or

(b) any payment of an amount not greater and on other terms not more favourable than it is reasonable to expect the society to have offered to a person of the same financial standing but unconnected with the society.

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