The Hinckley & Rugby Building Society has revealed that its share of the levy which bails out savers at failed banks and other financial institutions will soon top £1 million.

The mutual has had to pay large sums to the Financial Services Compensation Scheme (FSCS). Since the credit crunch Hinckley & Rugby has had to consistently hand over six figure sums from the profit it makes which it could otherwise use to improve rates for savers and borrowers and invest in growing the mutually owned organisation.
In October 2009 it gave the FSCS £239,000 and in 2010 the bill was £209,000. Last year the levy was £172,000 and on October 1 2012 Hinckley & Rugby had to give £175,000. It is expecting to make a provision in its 2012 accounts for a 2013 payment of £242,000 – taking the total to £1.037 million.

“To have had to pay more than a million pounds in just five years will be a rather unpleasant milestone to pass,” said Hinckley & Rugby chief executive Chris White.

“And that is not the end of it – we anticipate the following year’s provision will be more than £360,000.

“Hinckley & Rugby is, of course, not alone in carrying this burden. All our fellow building societies in Leicestershire and elsewhere are in the same boat and we anticipate that between us we have now faced a bill of over £3 million.”

White said that while the FSCS safety net for savers was essential, the mutuals such as Hinckley & Rugby are paying huge sums whilst representing little of the risk: “It is a challenge to make a profit in this era of ultra-low interest rates whilst being a cautious lender and paying affordable but attractive savings rates.

“To see more than a million pounds of that walk out of the door to correct the errors of others is very frustrating. We – and by that I mean the organisation and the people who own it, our savers and borrowers – are paying dearly for those mistakes.”