Consumers
What Others Say - 2011
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Mutuals generally offer a better deal to the consumer because they do not have to pay dividends to shareholders. Accordingly they are able to offer lower mortgage rates and higher savings rates to their customers than other institutions. This is not just the view of the BSA and the mutual sector, but of a number of external commentators - regulators, journalists, MPs, analysts, academics and others - as the following selection of comments shows.
- 20% increase in year-on-year lending puts societies streets ahead of banks
"Societies are the ones that have had the appetite to lend this year and are more active than high street banks. They are always phoning us and wanting to lend more. Societies will often think outside the box when it comes to products and that is what the market needs."
Dale Jannels, managing director of All Types of Mortgages, Quoted in Mortgage Strategy
December 2011
- "Does the Prime Minister agree that the history of Northern Rock represents a kind of modern-day morality tale or play, in that here we have a decent, mutual and responsible building society, which is then privatised, then over-extends, then goes bust, is then bailed out by the taxplayer, and now, sadly, instead of returning to mutuality, is sold off dirt cheap to one of the brashest companies in England?"
Malcolm Wicks MP (Croydon North) (Lab)
Prime Minister's Question Time
23 November 2011
- As I have said on other occasions, the crisis revealed deep flaws in the business model of demutualised building societies. Not one of them survives today as an independent entity.
Andrew Bailey, Director of UK banks and Building Societies, FSA
Speaking at the Future of Retail Banking Conference
24 November 2011
- Extract from the Treasury Select Committee evidence session with members of the Independent Commission on Banking, 10 October 2011
Tom Blenkinsop MP: The reason I ask is I do not think building societies, for example, got us into the situation that we are in at present. Do you think there are any lessons the banking sector could learn from building societies?
Sir John Vickers: We certainly think there are some important lessons from building societies for the banking sector and have drawn attention to them. In particular, there is the question of what risk taking or hedging can the treasury function of the ringfenced bank do. We think it is very educative how it has worked in the building society sector and the mutual sector where that hedging activity does happen. To say you are not even allowed to do hedging derivatives would be to rule out a risk mitigation strategy, and then there is a big question mark: how do you draw the line between risk mitigation and speculative activity? I think the building society model has some very important lessons for the sector generally, and we have referred to that in the report.
Martin Wolf: In fact, we consider we have learnt from it in this regard. The other aspect of it is by and large the building societies, as opposed to the converted building societies, continue to rely very heavily for their funding overwhelmingly on deposits. The evidence has supported one’s prior assumption that that is a more stable basis for funding of lending and that, it seems to me, is a strong argument for the ring-fence.
- You might think you can't go wrong with a savings account from your bank. But most of the big banks don't offer particularly competitive products. A quick glance at the current best buys shows that it's building societies and smaller specialist providers ..... that offer the best rates. Barclays, NatWest, HSBS and Lloyds TSB are notable by their absence.
The Sunday Telegraph
2 October 2011
- The societies are pushing the bigger banks hard, really giving them something to think about.
David Hollingworth, of mortgage brokers London & Country, quoted on www.mirror.co.uk
28 September 2011
- Crucially, a lot of that extra competition is coming from the building societies, who tend to look at applications on their merits rather than with a 'computer says no' policy. That's brought rates down as well as improving availability.
Evening Standard
27 September 2011
- However, a number of aspects of the proposals, if implemented, should give us at least some confidence that they may be effective. No doubt other noble Lords, like me, will have had a wry smile when it was suggested that the basis on which many of the risk principles should be applied should be that currently used under building society legislation, given that it is the demutualisation of the building societies that has led to some of the problems with which we now find ourselves. However, that legislation, that framework, is tough and it would be very sensible to use it.
Lord Newby speaking in a House of Lords debate on the Independent Commission on Banking 15 September 2011
- A number of smaller building societies have introduced competitive buy-to-let deals recently, with many offering better rates and more relaxed terms than high street rivals.
The best buy tables are dominated by smaller mutuals.
Melanie Bien, of Private Finance, the broker, quoted in The Sunday Times
4 September 2011
- Mutuals defy the downturn to increase lending
Britain's mutuals increassed their levels of lending in early 2011, despite the economic problems caused by the crisis in the euro zone and the uprisings in Eygpt and Libya.
Yorkshire Post
31 August 2011
- Despite the gloomy picture for the banking sector, research from KPMG has shown building societies have enjoyed a strong 12 months.
Daily Telegraph
30 August 2011
- High street banks are continuing to take a conservative stance on mortgage lending, with a majority reducing their total advances in the first six months of this year and focusing on lower-risk borrowers with big deposits......
......By contrast, building societies have reported strong growth in lending volumes. Yorkshire Building Society doubled its lending from £718m in the first half of 2010 to £1,506m this year, while Skipton Building Society let its lending increase from £141m to £717m.
- Overall, .......... building societies are now looking a lot stronger .......... Thanks to innovative financing deals, cost controls and quality of lending, their profits have soared. Gross lending by mutuals in the first half of 2011 rose 20 per cent to £10.2bn.
Societies' results also suggest that investors have little cause for concern. In May, Nationwide - the UK's largest building society - reported that annual profits rose 30 per cent, with bad debts down 35 per cent. Last month, Yorkshire Building Society - the second-largest society - increased half-year profits by 70 per cent and doubled mortgage lending. Higher 2011 profits have been reported by dozens of other societies, including Coventry, Skipton and Leeds, which make up the top five.
Financial Times
13 August 2011
- Building societies have injected fresh innovation into the mortgage market at a time when products tend to be limited to the lower loan-to-value ranges and are offered mainly to those with an impeccable credit history.
Coreco director Andrew Montlake says: “Building societies are back with a vengeance, which is a very welcome return. The advantage building societies always had is they are a bit smaller, so can be a bit more innovative.”
London & Country head of communications David Hollingworth says: “Building societies bring something different to the table. The stereotype that they are conservative is unfair to apply across the board. At the moment, it looks like they are going to shake off that image entirely. Over the years they have shown they can compete on price and can show inventiveness in terms of how they put products together.”
Money Marketing Online
12 August 2011
- Borrowers should look to building societies for the best deals. Ray Boulger at John Charcol, the broker, said "Building societies have been able to pass on to customers the recent fall in swap rates [the wholesale cost of funding fixed rate mortgages] because thay can move quickly in terms of bringing products to market.
"The smaller and medium-sized players can agree a product and launch it within a couple of days."
Sunday Times
7 August 2011
- Building societies, which are currently vying for savers' money and offering some of the best deals around, appear to offer a more consistent service than banks. According to the ombudsman, just 2 per cent of all complaints made concerned building societies. Banks made up 65 per cent.
"Many of the best deals are offered by building societies, which are also popular with customers within their local areas," said [Louise] Holmes [Moneyfacts]. "These deals offer the combination of competitive products and good service, while some people also prefer to support a local society rather than one of the large names."
Financial Times
6 August 2011
- Building societies are rapidly becoming the first time buyer's new best friend. In recent weeks, three small mutuals have launched innovative mortgages aimed at helping homebuyers with just a 5 per cent deposit onto the property ladder.
FT.com
5 August 2011
- Mutuals, especially some smaller societies, are very nimble at spotting gaps in the market and exploiting them with some brilliant products.
Jonathan Cornell, communications director at First Ac tion Finance, writing for mortgagestrategy.co.uk
5 August 2011
- The previous government's post-banking crisis white paper contained an explicit commitment to boosting mutually-owned financial-services companies, while the current administration has made similar pledges (and not just in finance). And having asked the Independent Commission on Banking to look into improving competition in the banking sector, one would have thought the Treasury would seize every opportunity to promote a diverse range of business structures. Northern Rock is the ideal place to start.
David Prosser, Business Editor, The Independent
4 August 2011
- There's new evidence that the best building societies are becoming stronger, at a time when the biggest banks are becoming weaker. Or at least that's true if you take seriously the judgements of credit rating agencies.Last night Moody's said it was upgrading the credit rating of four large building societies, Nationwide, Yorkshire, Principality and Coventry. Moody's said its upgrade of the four societies reflects their performance since the crisis and our expectations regarding their future performance. This is in stark contrast to the trend for the biggest banks, whose credit ratings are expected to be cut because of the expectation that regulatory reform will mean it is less likely that taxpayers would rescue them or bail them out in a crisis.
Blog of Robert Peston, BBC Business Editor, BBC website
3 August 2011
- HOORAY for our building societies! Its been a long time since there was anything to cheer on the High Street, but by slashing mortgage rates and putting out attractive savings deals, Britain's building societies have given us the chance to do just that.
James Coney, Money Mail Editor, Daily Mail
3 August 2011
- Building societies are shaming Britain's High Street banks by offering record low mortgages and attractive savings rates.......In particular, Lloyds Banking Group, Royal Bank of Scotland and Northern Rock, which were rescued with more than £65 billion of taxpayers' money, are struggling to compete and instead are offering rates that would leave customers thousands of pounds worse off.
Daily Mail
3 August 2011
- "Six of Britain's top building societies were today given a major vote of confidence by credit ratings agency Moody's as it upgraded their status as standalone" [institutions]
Evening Standard
3 August 2011
- Funding is more difficult to acquire than a few years ago, as most of the large banks have pulled out of the [self-build] market. However, some of the small building societies have begun to fill the gap.
Scotland on Sunday
31 July 2011
- Building societies are now offering almost all of the market-leading interest rates for savings and mortgages - and continue to increase their market share by acquiring customers from banks.
Financial Times
30 July 2011
- Financial Mail believes passionately that mutually owned organisations such as Nationwide play a crucial role in providing savers and borrowers with an alternative to the banks. And often they are a 'better' option with a particular emphasis on providing stellar customer service (from personal experience, I can't praise the staff at Nationwide's branch in Kensington, west London, highly enough) and fair treatment for all, not just new customers.
Jeff Prestridge, Personal Finance Editor, The Mail on Sunday
24 July 2011
- Building societies and niche providers are leading the field for savings accounts, topping the market for one-, two-, three-, four- and five-year bonds.
Four out of the highest seven one-year bonds on offer now come from building societies. In contrast, none of these top seven are provided by high street banks.
Financial Times
23 July 2011
- I am a strong supporter of co-operatives and mutuals. I think that they have a huge role to play not just in our economy, but in the provision of public services.
David Cameron MP, Prime Minister
Answering Prime Minister's Questions
House of Commons
22 June 2011
- Almost without exception, every one of the former building societies which became banks ran into trouble during the banking crisis. They all had unsustainable business models.
Financial Adviser, Leader comment23 June 2011
- The rush to demutualise in the closing years of the 20th century was one of the greatest acts of financial folly in history. In a few months, towering institutions were swept away and replaced with banks built on the shakiest foundations.
Not one of the seven building societies that chose to convert to banks in a fit of arrogance and ignorance is left standing. The stupidity shown by some of them brought the banking sector to its knees and cost us, the taxpayer, billions of pounds to bail them out.
Greg Wright, Yorkshire Post
21 June 2011
- Building societies provided an island of stability during the global financial crisis and should remain an important stabilising element within the banking system.
Nick Forbes, Leader, Newcastle City Council, letters section of The Guardian
18 June 2011
- When Northern Rock was a building society it was a highly respected institution, not only because of its prudent lending, but because it was the first choice for many small savers.
Kevan Jones, MP, Labour speaking in the House of Commons
16 June 2011
- The conversion of many of the building societies from mutual to shareholder ownership has been a catastrophe. Not one building society that converted remains an independent entity. They have either been taken over or gone bust. Those that remained mutual have continued more or less successful, with the weaker ones taken over successfully and the biggest, the Nationwide, coming through the down-turn in good shape.
Hamish McRae, Chief Economics Commentator, The Independent
8 June 2011
- Building societies remain a key part of the financial landscape, providing consumers with a much-needed alternative to the banks, especially in the savings and stricken mortgage market.
Given that the building society industry has survived the crunch with its reputation intact and without falling back on taxpayers for support (the demise of Dunfermline was its only blemish), it would be a great fillip for the sector and great news for consumers if Northern Rock (once a building society) were to be remutualised.
Jeff Prestridge, Personal Finance Editor, Mail on Sunday
8 May 2011
- I think that demutualisation, as it developed, was a failed and very costly experiment. It is a striking fact that no demutualised building society exists today as an independent entity under private ownership, and as we know a number lost their independence in very costly ways which damaged the stability of the financial system.
Andrew Bailey, Deputy Head of Prudential Regulation, FSA, Speaking at the BSA Annual Conference
5 May 2011
- Going forward we need a strong building society industry that can provide consumers and brokers with diversity of choice.
Jeff Prestridge, Personal Finance Editor, Mail on Sunday, writing in Financial Adviser
5 May 2011
- Political pressure for the remutualisation of Northern Rock is gathering strength: 100 members of parliament have signed an early day motion backing the return of the nationalised lender to the mutual sector.
The Observer
1 May 2011
- As well as being an integral part of many local communities, mutuals can compete on rates too. The savings and mortgage best-buy tables include a very strong representation from the building society sector. In fact, having reviewed the tables this morning, they show that more than 40 per cent of the most competitive fixed rate savings bonds are provided by mutuals. Fixed-rate mortgages is an area where building societies are even more dominant, offering the majority of best-buy rates across fixed terms ranging from two to five years, and not just at 75 per cent loan to value either.
Andrew Hagger, Moneynet, quoted in The Independent
30 April 2011
- Most Britons retain a respect for the mutual approach, and with good reason. Many building societies do their customers proud, concentrating on doing the simple things well, such as providing cash for savers and mortgages to homeowners. In survey after survey their members are repeatedly shown to be happier with their lot than bank customers.
The Times
30 April 2011
- A number of mutuals are very strong in the savings market and put some of their bigger banking rivals to shame when it comes to rates.
Andrew Hagger, Moneynet, quoted in the Sunday Times
17 April 2011
- More and more lenders, particularly building societies, are moving into the buy-to-let space
Andy Young, TBMC, quoted in the Financial Times
16 April 2011
- There are many ways we could improve competition, and help with the high cost to barriers of entry," she said. "First, Northern Rock should be mutualised instead of being sold."
Andrea Leadsom MP
- Traditionally and well deservedly mutuals have had a very high reputation among customers generally for satisfaction with their activities.....mutuals have engaged less than banks in speculative and risky activities....certainly they have provided a great deal of competition and diversification over the years.
Lord Borrie
Speaking in the House of Lords, 2 March 2011
- Small societies beat the big banks [headline]
Small societies are currently offering the majority of the most competitive mortgage rates - dominating this week's tables of the best fixed-rate loans.
Mortgage brokers point out that smaller building societies can also offer a very good service to match the rates. They are often much more innovative, too.
Financial Times
26 February 2011
- One of the most significant lessons of the global financial crisis is surely the need for a strong mutual sector. Many of the banks that got into difficulty were demutualised building societies. Financial mutuals, building and friendly societies, and credit unions were not responsible for the crisis. They do not have a culture of large dividends or excessive bonuses, and research across Europe has shown that a strong mutual sector helps to prevent excessive profits at banks.
Letter from Gareth Thomas MP, Chair, Co-operative Party
The Guardian
26 February 2011
- Many of the smaller building societies and specialist lenders, who use human beings to underwrite lending, often take a more sensible approach.
Ray Boulger (of mortgage broker John Charcol)
The Times
19 February 2011
- Consumers will have to search high and low for the best cash ISA deal. And interestingly, they are more likely to find it if they look beyond the big high street banks. This year we are seeing small and lesser-known players out-muscling the big boys when it comes to offering the best deals. Building societies in particular are offering the top rates.
Stefan Maryniak, personal finance expert, uSwitch.com
Press release 9 February 2011
