Building Societies (UK) betray their Savers

They are overlooking the majority of their members – millions of savers – and behaving increasingly like banks, where all that matters is profit.

Profit does matter. Building societies, like banks, need to build reserves and plan for future growth. But unlike banks, which have outside shareholders to reward (and taxpayers to repay in the case of Lloyds and RBS), building societies, which as mutuals are owned by their customers, should be putting customers first. That means depositors.




Building societies’ depositors number 21 million, far outweighing the sector’s mortgage borrowers, of which there are just 2.8 million.
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This article is fundamentally flawed.

The Building Societies were not set up to provide good deposit rates. Their original objective was to help people buy houses. That can only be done through paying low deposit interest and charging low mortgage rates.

The primary objective at the moment must be to build up enough capital to survive as mutuals. That means generating profit - not paying out high rates on deposits.

The article does not compare the deposit rates paid by Building Societies with the rates paid by the banks. So we have no way of knowing if they compare favourably or not. Presumably depositors in Building Societies are free to move their deposits to whichever bank pays the highest deposit rate?
 
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