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Wednesday, October 08, 2008

Support your local Building Society

It's not a fun time to look at the stock market, every day the market seems to fall by a rather large amount and some bank is in trouble.

At the moment an Icelandic Bank called Landsbanki is in trouble and for those of you who don't know it trades in the UK as Icesave. I had seen this bank for a while at the top of the savings tables and wondered who the hell Icesave was. Savers will now have to claim back money from the Financial Services Compensation Scheme (FSCS) I guess.

Although the banking industry has to bear a large chunk of the blame we also have to look at ourselves. In the 1990's we all clamoured to get a chunk of the latest building society to demutualise. Why? So we could get a quick turn on the shares. Of course what we didn't care about is that these new banks would no longer be driven by the customer but by the demands of shareholders.

And how many of those demutulisations exist today? Uh none. Halifax is being saved by Lloyds TSB (who took Woolwich and C&G ages ago) and Abbey, Alliance & Leicester and Bradford & Bingley are Spanish.

So perhaps its time to support our Building Societies. Building Societies aren't interested in it for profits but are are owned by their customers who get the profits. Makes some sense to me.

For a list of Building Societies

5 comments:

Angie Davis said...

Well said! The Halifax used to be the greatest building society in the world; now look at it!

I'm a great supporter of mutuals and applaud the Nationwide for resisting calls to convert to a bank. And how about Three Cheers for the Co-op and the John Lewis Partnership?

avalon said...

I was hearing this morning that a british lady sold her house and put £100.000 into the icelandic bank, can you imagine her thoughts at the time it went bust, i think our government are going to cover the whole loss now. It was also saying that icelands economy as a whole is now in a state of collapse will this happen to other countries one wonders?

Pete said...

fair point angie

Kate said...

Hey, less of the 'we're all to blame', thank you very much ;-) Some of us did not clamour for the demutualisation of the building societies. I actually had a very heated debate about it with a colleague at the time - he thought it was great, I didn't.

Conall McDevitt said...

A petition has been approved by the Number 10 web team, and
is now available on the Number 10 website at the following
address:

http://petitions.pm.gov.uk/Building-Soc/

The petition reads:

We the undersigned petition the Prime Minister to develop
policy which supports Mutual Societies and Building Societies
and puts people, not profit at the heart of finance.

A building society is a mutual organisation. This means that
instead of having shareholders, it has members who collectively
own the business and are also its customers. The main examples
of this type of organisation in the UK are co-operative
societies, mutual insurance companies and building societies.
Members have the right to vote for directors regardless of how
much or how little money they have with the society.

Each building society invests its profit back into the
society’s business. Unlike banks, mutuals do not pay dividends.
In other words - your money works for you, not the City. This
enables the building society to offer competitive rates of
interest on both savings and mortgages. It sets the rates it
pays savers at just less than the rate charged to borrowers.
This margin gives the society a profit. Many analysists believe
this offers customers a much better deal.

Given a crisis of confidence is at the heart of the current
crisis, we are calling on the Prime Minister to actively
support a trustworthy system of building and mutual societies
which can support home owners and encourage a viable property
market.


Please sign up an encourge all your friend to do so also.

Conall