What Others Say :: BSA - Building Societies Association

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What Others Say

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Building societies 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 building societies, but of a number of external commentators - regulators, journalists, MPs, analysts, academics and others - as the following selection of comments shows.

Some of the most battered banks are former building societies. Northern Rock, of course, is the most egregious casualty. But this week HBOS, formerly the mighty Halifax Building Society, is taking the humiliating step of asking its army of small shareholders for £4 billion in new capital. Bradford & Bingley, Britain's biggest buy-to-let lender, is the laughing stock of the City after its own botched attempt at raising money. Alliance & Leicester, its shares languishing at one fifth of the level of 18 months ago, is being kicked out of the FTSE 100, the club of the blue chip companies.
The Times
16 June 2008

The best argument for mutuality is blindingly simple - a building society is owned by its savers and borrowers, so its sole purpose is to serve them. That goal is not complicated by a conflicting need to satisfy the Square Mile.
The Observer
8 June 2008

If you just want competitive savings rates, good personal service and a range of home loans from a prudent business that's well equipped to ride out global market shocks, building societies remain a solid bet.
The Scotsman
7 June 2008

In fact, the governance arrangements of building societies have proved rather sounder than those of the heavily "incentivised" bankers. Building society managements may be stuffy and old-fashioned, but at least they don't go blowing their capital on CDOs and hare-brained acquisition-making.
Independent
7 June 2008

Building societies have offered more best-buy savings accounts than banks, and have also had two-thirds of the most consistent top-paying accounts, according to research by Investec Private Bank...........Rachel Thrussell, head of savings at Moneyfacts, the rate monitor, said societies' consistency was also more broadly based. "While they may not always pay market leading returns, they give consistently decent rates across all their products." Smaller, regional societies were particularly reliable, she added. By contrast, banks might have "a couple of really good rates" along with many much poorer deals.
Financial Times
2 June 2008

Moneyfacts....tracks the most consistent accounts that are still open to new savers, based on interest paid over the previous three years. Moneyfacts says it has seen increasing online traffic from savers "fed up" with accounts losing competitiveness and who "don't want to keep moving their money". The results show that building societies "tended to play fairer than banks".
Financial Times
17 May 2008

Meanwhile, with B&B floundering, the wave of building society demutualisations a decade ago (Halifax, Northern Rock, Alliance & Leicester et al) looks even more unfortuante. Not so much a triumph of popular capitalism as a disastrous exercise in value destruction.
The Times
15 May 2008
Building Societies have suffered less than banks from the turmoil in credit markets, because they raise more of their funding from savings accounts rather then on the wholesale markets
The Independent
9 May 2008
Overall, Nationwide and its fellow 58 building societies have been beneficiaries of the credit squeeze. They have seen large inflows of savings and new mortgage business since the crisis started in August.
Financial Times
5 May 2008
If you have a local building society in your area, as opposed to a branch of one of the giants, I would open an account there fast. The credit crunch is revealing the true colours of the lending fraternity and it isn’t a pretty sight. The banks ... ... and the government are openly shirking their public duty to provide affordable finance for people of modest means to buy a home. Some, including the nationalised Northern Rock, have adopted a "take it or leave it" attitude by cranking up mortgage interest rates to deterrent levels. Now First Direct, HSBC’s telephone banking arm, has pulled the plug completely, bleating that this is only a temporary measure. Temporary, that is, until it feels like opening for business again, never mind the customers. Building societies .............. are a better prospect. Mform.co.uk, the online mortgage introducer, says that the Yorkshire, Furness, Chorley and West Bromwich have been the best-value lenders this year. However ............... many are devoting their funds to their immediate communities. So stroll round and open an account. Maybe the global credit crunch will help revive these long-neglected lenders. Their savings rates aren’t bad, either.
The Sunday Times
6 April 2008
One satisfied [mutual] customer is Paul Giangrande, a haematology consultant.

He says: "There are no shareholders to pay and no fat cats to be paid out of the money that I'm paying in. It is essentially a democratic organisation in which members have a say. There are no tricky shareholder groups trying to exert pressure. I can get better rates and better treatment."

The Times
5 April 2008
Mutuals have also outperformed public companies with their no-frills savings products. Moneyfacts, the financial comparison website, trawled savings, mortgage, loan and credit-card offers to find the organisations that provide consistently market-leading rates. Building societies dominate the consistency tables for general savings accounts, cash ISAs and standard variable mortgage rates (SVRs). For no-notice savings accounts, four of the five top providers over 18 months were building societies. The three most consistent providers over 36 months were also building societies. Three of the top four most consistent providers of internet-based savings providers over 36 months were - yes, you've guessed it - building societies. They also dominated the tables for ISAs and for SVR mortgages.
The Times
5 April 2008
Business is booming for building societies after the Northern Rock debacle, with customers seeking alternatives to the banks that they believe are taking too many risks with their hard-earned cash. Figures from the Building Societies Association (BSA) showed a huge inflow of savings in the last four months of last year, particularly September and October, most of which could be attributed to the Northern Rock crisis. The total inflow for the year was £16.1 billion - approximately twice the level recorded in the previous year and a record for building societies.
The Times
5 April 2008
Nationwide has gone from strength to strength... [and] ... small societies are well positioned. Most are streamlined, innovative and able to respond to market changes quickly with new deals and market leading-rates.
Mark Harris, Managing Director
Savills Private Finance
18 March 2008
If the recent crunch proves anything, it must be the benefits of mutuality. Not to the exclusion of all else, but as a valuable part of the financial ecosystem.
The Independent
1 March 2008
Smaller building societies that never went down the route of wholesale funding, instead financing their mortgages from savings deposits, have emerged almost completely unscathed by the credit crunch. Indeed, many enjoyed a huge windfall when billions of pounds in savings left Northern Rock in the second half of 2007.
The Guardian
26 February 2008
Smaller building societies which have always financed their mortgages from deposits have emerged almost unscathed by the credit crunch.
The Guardian
25 February 2008
Most building societies have taken "treating customers fairly" in their stride, claiming with justification that they put customers first irrespective of whether they are long-standing or newish.
Jeff Prestridge
The Mail on Sunday
10 February 2008
Building societies offered the best value on mortgages in 2007. According to the Mform.co.uk, whose research ranked best buy products based on the true cost including all fees across the year, building societies scooped all top ten places for 2007.
Mortgage Introducer
3 January 2008

Building societies are winning the dogfight for personal deposits with record inflows boosted by former Northern Rock savings, while banks continue to face a downturn in new savings.
'Savers spurn banks for building societies'
The Independent
29 December 2007

An all-party parliamentary report looking at the cost of becoming a public company found millions of account-holders at former mutuals, including Alliance & Leicester and Abbey, had lost out when the societies became banks..... people often found their choice restricted after conversion as firms concentrated on shareholder value rather than customer satisfaction.
Daily Mail
1 December 2007

[Moneyfacts] research found that three-quarters of the top mortgages came from mutuals rather than from banks. The largest lender, HBoS, which includes Halifax, had no deals in the top 250.
Mail on Sunday
4 November 2007

70% of the top 250 mortgages available today are offered by building societies, research from Moneyfacts.co.uk reveals.

A survey carried out by Moneyfacts.co.uk covering the whole mortgage market, including fixed, discounted and variable rates over various time periods has shown that those looking for a mortgage today may well be better off going to a building society than to one of the larger banks or mortgage lenders.
Moneyfacts press release
30 October 2007

So don't bank on your bank - building societies have better deals.
Sunday Mirror
28 October 2007

Lisa Taylor of Moneyfacts said: "It is worth looking at the mutuals for a good savings account, as they often have a more extensive range and pay higher rates than the banks with fewer disadvantages."
Lisa Talor, Moneyfacts quoted in Daily Telegraph
27 October 2007

A record £2.8billion was desposited in building society savings accounts last month. The majority is believed to belong to Northern Rock customers looking for a 'safe haven' for their money. Fears that the country's fifth largest mortgage lender faced collapse saw thousands withdrawing their savings. It is now clear most then moved their money into building societies, which are seen as being run in the interests of their customers, rather than shareholders.
Daily Mail
19 October 2007
Building societies have traditionally offered a great range of accounts paying generally good returns. Today 54% of Moneyfacts.co.uk best buy accounts are from Building Societies, dominating in particular the Mini Cash ISA market, taking 5 out of the top 6 places. Their accounts tend to pay middle to top rates, and pleasingly they don’t often pay rates towards the lower end of the market.
Rachel Thrussell, Head of Savings at Moneyfacts.co.uk
18 October 2007

Building societies are also at the forefront of the drive for more affordable housing. Lending to housing associations increased from £1.5 billion to £2 billion in 2006, an increase of almost one-third helping to build new social housing and improve the quality of the exisiting social housing stock.
Financial Adviser
4 October 2007

Unencumbered by demanding shareholders and long sign-off processes, many building societies are able to push forward innovative ideas for for the benefit of their customers, offering competitive and forward thinking products.
Financial Adviser
4 October 2007

Mutuals offer many of the mortgage market's easiest to understand and fairest deals.

Exit fees are another area where societies score well. Before lenders started scrapping them in late July and early August because of regulatory pressure, only to replace them with a number of other fees, the only providers to have reduced them were mutuals.

A quick look at a best buy table from Money Mail at the time of writing shows societies leading the way.
Guy Anker, Money Mail Reporter at the Daily Mail
writing in Mortgage Strategy
3 September 2007

Mutual organisations, such as Nationwide, are much better positioned [than banks] to be holier than thou, and highlight bad practice. They can afford to sacrifice some of their profits for more transparent and competitive products because they are owned by their customers, not by shareholders.
The Independent
13 August 2007

There is no doubt that most building societies remain more customer-focused than the banks. Research conducted on behalf of the Building Societies Association shows that customer satisfaction levels remain the highest across financial services. Treating customers fairly seems to come more naturally to a building society than a bank. This focus on customers explains why many societies continue to invest in their branch networks while some banks are desperate to close them down.
Mail on Sunday
12 August 2007

Building societies with decent High Street accounts for pensioners include Norwich & Peterborough, Skipton, Newcastle, Coventry, Leeds, Yorkshire, West Bromwich and Chelsea........Halifax, the largest savings bank, along with the big four clearing banks, Barclays, HSBC, Lloyds TSB and RBS/NatWest, continues to ignore pensioners looking for decent branch-based accounts.
Daily Mail
25 July 2007

Ed Balls, Economic Secretary to the Treasury, praised building societies for leading the financial services sector in responsible lending and product innovation.
Financial Adviser
28 June 2007

We are greatly encouraged by the efforts made by the building society sector in relation to TCF.
Julia Dunn (Head of Retail Firms Division) and Lisa Sturley (Associate, Retail Firms Division)
Financial Services Authority, writing in Butlers Building Society Guide
May 2007

The very principles at the heart of treating customers fairly are becoming the hallmark of building societies' service to their members......we are pleased to say that as a sector mutuals are head and shoulders above the average high street bank. And that is good news.
Leader comment
Financial Adviser
31 May 2007

Small building societies are the place to go for the best mortgage deals. New research shows they offer better rates than the big banks and dominate the Top 10 for two-year, three-year and five-year deals.

Eamonn Rice, of advice website mform.co.uk, said: "It is striking that smaller societies dominate the best buy lists, yet the 25 biggest brands account for 94 per cent of mortgages."

Building Societies can offer competitive products and reward loyalty because, unlike the banks, they don't have to pay shareholders.
Sunday People
27 May 2007

Record numbers of building society customers are beginning to take an active interest in how their mutuals are being run.
Jeff Prestridge, Financial Mail on Sunday
27 May 2007

The latest survey by Investment, Life & Pensions Moneyfacts has revealed how many mutual societies are outperforming the larger, more well-known life offices when it comes to their with profits payouts. In terms of the average full cost endowment payout the mutual societies outperformed their plc counterparts over all the terms surveyed (10, 15, 20 and 25 years). For instance, the mutual providers have delivered an average full cost endowment payout of £48,581 after 25 years compared with £38,463 from the average plc, a superior return of 26%.

The strong performance of the mutuals is also evident in the latest with profits bond payouts. The average difference between payouts offered by mutuals compared to plc’s is just over 5% after both five and ten years. The mutual societies are also delivering some of the highest payouts on with profits pensions, with the average mutual delivering 18% more than the average plc after 20 years.
Moneyfacts Press Release
22 May 2007

Savers still haunted by the Farepak Christmas club scandal can finally look forward to some cheer this year. Building societies have got together to offer new festive savings accounts after the Farepak collapse last year robbed 150,000 families of £40million. Their initiative guarantees Christmas savers will not lose money - and they will even gain some extra interest.
Charles Rae and Tim Heming, The Sun
Reporting on the response by Dudley, Furness, Scarborough and Skipton Building Societies to the Farepak collapse.
22 May 2007

The vast majority of child trust funds are being provided by mutuals.
Ed Balls MP
Economic Secretary to the Treasury
House of Commons
27 April 2007

We need to praise the role of the mutual building societies, which do a lot of wonderful work, much of which is unsung.
Sir Nicholas Winterton MP
House of Commons
25 April 2007

[Building] societies are about loyalty, respect, customer care, and staff inclusion. Banks are about shareholder value and profit......Staff cultures differ too. Society staff take pride in their work, have an appreciation of teamwork, believe in their mission and are committed to their employer. Bank staff are the antithesis of "There's no I in team". The bank philosophy is "Me first". And they're as chauvinistic as hell.
Peter Mounty
Freelance journalist writing in
Mortgage Strategy
16 April 2007
From our research we have noticed that on the whole building societies manage to bring out more competitive products. Banks offer a more diverse range but they can't afford to compete all across this range, mainly because at the end of the day they need to balance their books and report back to the shareholders.
Julia Harris, Moneyfacts
14 April 2007

The mutual sector as a whole plays a vital role in British society, and more than 19 million British individuals-one in three of the population-are members of one or more mutual societies. That is a considerable number, and it compares favourably with other forms of economic participation and mass membership. For example, there are 8 million more members of mutuals than there are listed owners of shares. Mutual organisations have more than three times as many members as trade unions.
Sir John Butterfill MP, House of Commons
23 March 2007

The contrast between a mutual and a company can immediately be seen when we look at how they distribute the profits of their business. They do not pay dividends to shareholders, so they are able to operate on much narrower margins than plcs. That means that, all things being equal, they can deliver better value for their customers. They can also influence quite considerably the pricing policy of their competitors. For example, pressure from building societies was the main factor preventing banks from charging for access to cash machines.
Sir John Butterfill MP, House of Commons
23 March 2007

Mutuals are consistently placed higher than plcs in the "best buy" tables on a variety of criteria, ranging from savings and mortgage rates on the one hand to annual premium-with-profits policies for insurers on the other.
Adrian Bailey MP, House of Commons
23 March 2007

Building societies have maintained their branch networks and their roots in local communities in a way that plc banks have not.
Adrian Bailey MP, House of Commons
23 March 2007

The absence of external shareholders means that there are no conflicts of interest between the claims of consumers and owners, leaving mutuals no incentive to exploit their customers for short-term gain. As others have said, that has led to greater trust among consumers for the products offered by the mutual sector.
Meg Hillier MP, House of Commons
23 March 2007

Mutuals provide a competitive spark in the wider marketplace. For mortgages and mortgage rates as well as for savings rates, mutuals are at the top of the best-buy tables. That benefits not only their own members, but those in other organisations who must compete with the best-and when it comes to those basic services, mutuals and building societies are the best.
Andy Love MP, House of Commons
23 March 2007

Demutualisation has been a disappointing experience: not an entirely negative one, but, generally, the demutualised societies have not achieved what they set out to achieve.
Andy Love MP, House of Commons
23 March 2007

At last year's Moneyfacts awards, mutuals took almost 75 per cent. of the top three places in the nine mortgage categories. The best available rate for five-year fixed mortgages, for instant mini cash individual savings accounts, and for instant access accounts were all offered by building societies, according to a 2005 study.
Ed Balls MP, House of Commons
23 March 2007

Other mutuals have been following the building societies' lead in corporate governance reform.
Ed Balls MP, House of Commons
23 March 2007
So, let us celebrate mutuality and the competition it provides in financial services.
Jeff Prestridge, Personal Financial Editor of the Mail on Sunday
Writing for Financial Adviser
22 March 2007

Mutuals again dominated the top 20 slots this year, taking 16 positions.
Rachel Thrussell, Head of Savings, Moneyfacts
Moneyfacts' survey of best cash ISA deals.
March 2007
Mutual ownership means that societies do not have to pay dividends to private or institutional shareholders. The savings can be passed on to existing and prospective members. The net interest margin (difference between the interest paid to savers and charged to borrowers) of the sector's top ten societies averaged 1.03% at the 2005/2006 year-end, compared to around 2% for most banks. As a result, building societies consistently feature in the best mortgage buying tables.
By Nick Page and Stuart Last
UK Retail Banking Insights, PricewaterhouseCoopers
March 2007
Building societies are owned by their members, so their profits are ploughed back into providing higher savings rates, lower mortgage rates and better value for their customers.
Charlotte Beugge
Money Mail Deputy Editor, Daily Mail
28 February 2007
When it comes to treating customers fairly, building societies have got the banks beat by exhibiting a little tender loving care to their members and communities
Jeff Prestridge
Personal Finance Editor, Mail on Sunday, writing for Financial Adviser
20 January 2007

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