Building societies benefit
BY TOM SCOTNEY
Legal & Financial Editor
Savers are turning back to traditional sources in increasing numbers as the banking sector continues to melt down, a local building society has said.
The net amount of savings received by the Tipton and Coseley Building Society during September and October totalled a record £11million, the highest ever two-month amount in the society’s 107-year history.
Chris Martin, the Tipton’s chief executive, said it was finding many new customers had been scared away from the mainstream banking sector by the financial crisis.
He said: “What most people want from their building society is a local, convenient, face-to-face service and that’s exactly what they can expect at the Tipton. As these figures show, members know that the Tipton provides a safe and secure home for their savings, combined with competitive returns.”
As well as the record savings amounts, the building society is also celebrating a new customer services award. In the Financial Services Authority’s Treating Customers Fairly initiative, the Tipton was ranked as excellent or very good in a survey of hundreds of customers.
Mr Martin said: “We are extremely proud to have received such positive feedback from our new and existing members. Their views really do influence the way in which we operate and their feedback is a driving force in the ongoing development of our customer service standards.”
Tipton and Coseley Building Society is based in Tipton and operates from four branches in the Black Country. Firmly committed to remaining a mutual organisation, it offers local people a comprehensive range of financial services including competitive savings, mortgage and insurance products.
Many smaller building societies saw a record month for deposits in October as people pulled their money out of mainstream banks following the difficulties seen by the likes of Bradford and Bingley and Halifax Bank of Scotland.
Building societies are seen as more secure than banks because they are owned by members and are not governed by the need to return money to shareholders. They are also involved with more secure sources of funding.
In the year to the end of September, building societies saw a net intake of £18.35billion, compared to just £8billion in the whole of 2006. Neil Johnson, the policy manager of the Building Societies Association, said the recent financial turbulence was a new dawn for building societies, which had become more unfashionable over the past years.
“People are putting record sums into building societies because they recognise they are safe,” he said. “Over the last 12-18 months they have started to look at how financial institutions are run and seen the value of simplicity and of being a member, not a customer.”
But despite the new money and new customers seen by building societies, many have still had to cut their ambitions in terms of lending because of the lack of money available in the market.
Total mortgage lending by building societies and banks fell to £17.7billion in September, the lowest monthly figure for more than three years.
Gross lending for 2008 is expected to about £255billion compared with £363billion in 2007. Net lending, which strips out the value of loans paid off by borrowers, is expected to more than halve to £40billion.