Building societies offer excellent deals on the High Street

Tags: Local Building Society, Mutuality

Building societies offer excellent deals on the High Street

2011 marks the 25^th anniversary of the Building Societies 1986 Act. This legislation changed the landscape of Financial Services and allowed societies to take on new powers and diversify away from their traditional roots.

Many of the larger societies chose to take this opportunity and convert into banks, however it is a quite remarkable fact that all of those societies that moved away from their mutual status were subsequently taken over. Names that were once the largest building societies, including the Halifax, Alliance and Leicester and the Abbey National, are now part of the banking network and their names have disappeared from above the doors on our High streets.

Locally, the Alliance and Leicester and now part of the Santander group as are the Bradford and Bingley. Woolwich are part of Barclays Bank, Halifax are part of Lloyds Bank and the failure of the Northern Rock bank started the credit crunch exactly 4 years ago this month, which subsequently lead to taxpayers’ money being used to support the banking sector.

Building Societies in 2011

The societies that did not take up the options available under the 1986 Act remain as traditional building societies.  They are owned by their members and make a sufficient level of profit which is held as reserves for the benefit of current and future members, rather than making profits from customers to reward their shareholders.

Building Societies are funded primarily by members’ deposits, and have a much lower exposure to money markets than their banking counterparts. Societies have to offer good rates of interest to attract and retain their savers, in order to have funds to lend. This year societies are receiving good coverage for their ability to offer a range of competitive mortgage products, including residential home loans, buy to let investment deals and first time buyer products requiring just a small deposit.

Leicestershire remains a stronghold of mutuality with 6 independent building societies having their headquarters here, the most of any county in England. Excellent deals for both savings and mortgages are often available from local societies, concentrating on lending to local people in the local area and supporting the communities in which they are based, by employing local people and using local suppliers.

Looking Ahead

We have re-entered a period of extreme turbulence and uncertainty in the global markets, with worldwide issues that are affecting the UK. However 25 years on from the 1986 Act, Building Societies still have a key role to play in the provision of financial services, by offering competitive mortgage products and a safe and secure home for local investors’ deposits.  

Those societies that opted to diversify into plc status are no longer on the High Street. The 21^st century building society is a well run financial services organisation, competing successfully with the banking giants but able to survive and grow by offering customer choice and excellent standards of customer service.

And looking forward to the next 25 years !!

Colin Bradley

Deputy Chief Executive                                                               8^th August 2011

Published in Loughborough Echo August 2011