The BSA had been out of the mortgage market for around 12 years and I started at Halifax in 1995 when it was a building society and was there when it converted to bank status, so it was like going back to my roots.
How are building societies coping with the current crisis?
They’re in a better shape than a lot of banks at the moment. Generally, their lending policy has been more conservative although it would be fair to say that some have had difficulties.
There’s less lending activity all round and it’s tough for societies because they are restricted by what they hold in retail savings due to their mutual status. There’s little appetite to save and by statute, societies have to raise half of their lending from deposits but that figure is often closer to 75%. The low Bank of England base rate is not helping.
Do you think the era of seeing mutuals as the bedrock of the financial services industry has passed?
No, I think that time is still to come. Nobody has lost money in a society since before World War II and there have been no Financial Services Compensation Scheme payouts as a result of societies going under. Now is the time for them to capitalise on that history.
Public confidence in both banks and societies is lacking and there’s not much more the government can do to boost it. For societies, this is a time to make sure they can deliver the products their members want.
What’s next on the agenda for the BSA?
We want to expand by raising our profile and adding more value for members. I’m excited by the opportunities facing the sector at the moment. Societies are being talked about more than ever before – even Prime Minister Gordon Brown is talking about them.
Nationwide has changed its slogan to promote itself as a society and Principality has put ‘building society’ back on its headed paper. Societies are back in vogue and we want to ensure that continues.