Mutuality pays – for building society bosses

I have always had a soft spot for building societies.

Maybe it’s because I worked for one in the 1980s as an economist. Bristol & West it was called, and long since gone to the cemetery for building societies (not many plots left). Lovely departmental boss, no work pressure and little economic analysis required.

But it is more than a former work bond that draws me to these financial mutuals. More than 20 years of personal finance reporting have made me realise that most building societies strive to do more good than harm.

They try and look after their customers – be they savers or borrowers. Some such as Nationwide, the biggest by far, even reward customer loyalty. It’s an unusual trait in a financial services industry where new business is king and loyalty is usually ‘rewarded’ with pathetic savings rates and higher insurance premiums.

Yet these cuddly mutuals are not without blemish. The financial crisis of the mid-2000s blew many of them away as their decision to diversify into risky areas such as commercial lending backfired spectacularly.

Dunfermline was probably the biggest failure although other ailing societies were only saved by white knights such as Nationwide and Yorkshire which swept them up in the interests of maintaining the industry’s integrity and trust.