It’s not been the best week for building societies. Mid-week the ratings agency Moody's downgraded several societies to near junk-bond status. Even Nationwide go downgraded from B to C-. There was also the news coverage of allegations about the robustness of the FSA’s regulation of building societies.
This is not entirely news. The building societies movement has for some time been rescuing its weaker members. While the Treasury stepped in with the Dunfermline Building Society, generally building societies have not needed huge bail-outs from the taxpayer.
Now is certainly a time for building societies to remember that they should not try to mimic banks.
This week does not disprove the argument made by the FT’s Financial Adviser in 2005:
Mutuals add value to the efficiency of the financial services market by giving more choice and a measure of integrity, value and transparency that is not often experienced by consumers. They are a reminder to plcs of corporate objectives over and above maximising returns for investors, including addressing the concerns of consumers.
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