Introduction to building societies and other mutuals

Published by a ��˾��ҹ�� Financial Services expert

Practice notes

Introduction to building societies and other mutuals

Published by a ��˾��ҹ�� Financial Services expert

Practice notes

This Practice Note provides an overview of the nature of building societies and mutual organisations, the legislation that underpins their existence and the activities that they are permitted to carry out.

Nature of a Building society

A building society is a financial institution that offers savings accounts and mortgages as its main business.

Building societies are mutual institutions. This means that most customers who have a savings account or a mortgage with a building society are also members and have certain rights to vote and receive information, and to attend and speak at meetings. Each member has one vote, regardless of how much money they have invested or borrowed or how many accounts they may have.

The key distinction between a mutual over a Stock market listed or 'plc' bank is that a mutual does not have to pay dividends to its shareholders. This means that the surplus or profit a society makes can be put back into the organisation to benefit its members, through interest rates which are higher for savers and lower for borrowers,

Jurisdiction(s):

United Kingdom

Key definition:

Building society definition

What does Building society mean?

A building society within the Building Societies Act 1986 (as amended).

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