The Pros and Cons of Mutual Building Societies – Over Banks and Other Mortgage Lenders

Building Society Pros:

· Owned by the members – members have a direct say in decision making.

· More democratic. Every member has a vote

· Works for the interests of the members, not of the shareholders and financiers.

· Often offers better saving and borrowing rates.

· An investment for the long term – offering security and dependability.

 

Building Society Cons:

· While democratic in theory member control is often a myth with the real power resting with managerial cliques.

· Members’ share is locked into the society. One of the arguments for demutualisation is that the members’ share is freed up in the shape of a windfall.

· Members bear the risks, as well as the rewards, of the market and are not protected by the shareholders or limited company status.

· There is no access to external equity capital which societies argue is essential to competing in the modern financial market.