Page 1: Introduction
The Building Societies Association (BSA) is the trade association for all the UK's building societies. A building society is a financial institution that offers savings accounts and mortgages as its main business.
About 15 million adults have building society saving accounts whilst over 2.9 million adults are currently buying homes with the help of a mortgage. The UK has 54 building societies with assets of £395 billion. All are members of the BSA.
Building societies are mutual organisations. These are different to other forms of business. A mutual organisation has no shareholders and does not need to pay dividends. Building societies are collectively owned by their members the people who save with them and borrow from them. Building societies actively support the communities in which they are based. This helps to differentiate them from other financial providers.
In a limited company, like a bank, there are shareholders to satisfy. Shareholders want the company to be profitable, taking a share of the profits (in the form of dividends) in return for their investments. Shareholders usually have different objectives to customers. For example, customers want low prices, but this may mean less profit for shareholders.
Changes to the Building Societies Act 1986 meant that in the 1990s some building societies gave up their mutual status and became banks. It is estimated that the requirement for banks to pay dividends to shareholders adds around 35% to their running costs. Consequently, those building societies that remained mutual (the BSA's members) can generally provide better rates than rival banks.
The BSA is a central point of contact and represents its members in a wide variety of areas. Examples include lobbying government when changes in legislation are discussed and in interpreting current legislation. It gathers the views of its members and expresses them with more strength than each individual society can. For example, instead of speaking to every building society separately, financial regulators and other stakeholders speak to the BSA.
The BSA, therefore, has a key communications role. It communicates a detailed policy to its members so they can communicate with their own members their customers. It also provides research and guidance on issues of interest to societies.
This case study shows how building societies communicate with their own members on many different levels.