What Benefits Do Building Societies Bring?
29th November 2012
In theory building societies can provide better value services to their members because profits aren’t being distributed to shareholders. Is this theory borne out in reality? Are building societies like Nationwide a good place to take your current account business during a debt management plan?
This week the Nationwide building society reported a slump in profits. The reasons are very interesting. Just like our banks, they have been setting aside cash to cover PPI claims and have been losing money on commercial property lending that hasn’t worked out as expected.
Guardian readers may have predicted that this would happen. In 2010 the paper wrote about the claims of a disgruntled manager at Nationwide. This manager claimed that the building society had lost track of what is meant to be important to a building society and was acting like a bank in almost every respect. This struck a chord with Guardian readers, some of whom wrote in to the paper to offer their own stories of being subject to a hard-sell from Nationwide branch staff.
There is also much doubt that the products on offer from building societies are any better than those provided by profit-motivated banks. Financial website MSN Money checked this out earlier this year and noted an almost total absence of building societies from the best-value financial products available in the wider financial market.
Do “mutuals” treat their own members better than banks treat their customers when they get into debt? Not in the experience of debt management plan providers. There was amusement when a Nationwide building society employee announced to a debt advice conference recently just how much better his building society is than the banks. In the experience of the debt management firms that were present the comments were totally unsubstantiated.
To summarise the last few paragraphs… building societies have mis-sold products (like banks), lent money recklessly at times (like banks), seem not to provide best-value products, and aren’t any more sympathetic than banks when members get into financial trouble.
There may however be another side to this. While thinking that the building society versus bank debate is bogus, the Nationwide building society is doing some positive things at the moment. Their Cash Card account makes it into our list of bank accounts to consider for a debt management plan, they tend to finish towards the top when customer service surveys are done, and they’ve made good progress in offering more mortgages to the public and especially to first-time-buyers.
None of these positives at the Nationwide building society seem to be connected specifically to being a building society, but they are positives nonetheless.