Lord Laird – 2015 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Lord Laird on 2015-11-24.

To ask Her Majesty’s Government what is the current level of HM Treasury’s outstanding statutory debt in relation to the Dunfermline Building Society; how much has been paid by the Financial Services Compensation Scheme towards that debt; and whether any assets have been retrieved or sold since the Society went into administration.

Lord O’Neill of Gatley

In March 2009, Dunfermline Building Society (DBS) was entered into special administration under the Banking Act 2009. As part of the resolution, HM Treasury provided just under £1.6 billion to enable the transfer of the core DBS business to Nationwide Building Society. The remainder of DBS is currently being wound-down by KPMG affiliated administrators.

Most of the estate has been wound-down and the remaining commercial book is expected to run-off over the next 1-2 years, at which point the administration will be complete. In 2014, the remaining residential mortgage portfolio was sold by the administrators to Arbuthnot Latham and Co. As of 31 March 2015, HM Treasury has received just over £1 billion from the DBS estate.

The Financial Services and Markets Act 2000 ‘Contribution Regulations’ allow the Treasury to recover any shortfall from the estate from the Financial Services Compensation Scheme (FSCS), subject to a cap, via an interim levy on industry. In October 2014, the FSCS made the first payment to HM Treasury with respect to DBS, of £100 million.

HMT expects to recover the amount in full.