The Building Societies Association (BSA) has made a complaint to the European Commission about the plans for the Northern Rock bank.
It states the restructure will cause problems for the building societies by having an unfair advantage in the mortgage market.
Instead, the BSA believes Northern Rock should become a bank specifically for first time buyers or those struggling to find a deposit.
Earlier this year, Credit Suisse drew up a sales plan showing Northern Rock being put back into the private sector by the end of 2009. It suggested the bank should be split into two, with one bank taking all the mortgage debts and the remaining assets would be the ‘better half’ called BankCo with assets worth around £2 billion.
The BSA believes that having a bank such as the proposed BankCo with virtually no poorly performing or unpaid mortgages would give it an unfair advantage whereas all its rivals will have to absorb their own losses.
The European Commission is to examine the case and ensure the plans do not breach any European state aid rulings. A decision is expected later this year.
In previous articles, we have speculated upon the future of Northern Rock and how the credit crunch may change the mortgage market, and it seems for mortgage advisors and those taking CeMAP training to become mortgage advisors the future looks interesting.