A building society is a financial institution that offers savings accounts and mortgages as its main business. In recent years a number of building societies have diversified and now offer a wide range of personal financial services.

A building society is a mutual institution. This means that most people who have a savings account, or mortgage, are members and have certain rights to vote and receive information, as well as to attend and speak at meetings. Each member has one vote, regardless of how much money they have invested or borrowed or how many accounts they may have. Each building society has a board of directors who run the society and who are responsible for setting its strategy.

Building societies are different from banks, which are companies (normally listed on the stock market) and are therefore owned by, and run for, their shareholders. Societies have no external shareholders requiring dividends and are not companies. This normally enables them to run on lower costs and offer cheaper mortgages and better rates of interest on savings than their competitors.

The other major difference between building societies and banks is that there is a limit on the proportion of their funds that building societies can raise from the wholesale money markets.  It is illegal for a building society to raise more than 50%of its funds from the wholesale markets.  The average proportion of funds raised by building societies from the wholesale markets is 30%.