Will The Pandemic Spark a Revival For Mutuals?

Some people have had a good pandemic. Those in the public sector have enjoyed full wages, sometimes coupled with a lack of commuting costs of around £3000 for the year. In the NHS and other parts of the public sector overtime has been plentiful too. Most of us, regardless of employer, have cancelled holidays for a year or more, which could save the average person with a family about £2500 on top. What to do with that extra cash is a tricky one. Banks are offering near zero interest on savings, the buy-to-let market has been deliberately wrecked by the government as they have allowed tenants to withhold rent for 12 months, plus profits on the eventual sale of rented property looks likely to be hit by increased taxation in the future. So who would enter that one-sided market now, except housing trusts, charities and the public sector itself?

Maybe the traditional mutual building society account, or a mutual run life insurance or investment plan offers a safe way to put your cash savings to work? Then there is the ethical angle, as mutuals are run by the membership not a board of directors. Here’s some news from The Nottingham;

Partly fuelled by the Coronavirus pandemic and its impact on how people view their finances, new research reveals 16% of people in the UK took out products from building societies over the past 12 months, and one in eight adults – the equivalent of around 6.3 million people – plan to do this over the next year. One in five (22%) of those planning to do this will be first-time building society customers.

The study was commissioned by The Nottingham, which itself welcomed 40,000 new customers in 2020.

The COVID-19 pandemic has driven more interest in what building societies offer, the research shows, with 15% of adults saying they are now more likely to take out products from a building society or other mutual.

However, customers are not just interested in getting the best deals from the UK’s building societies.  Around 36% of customers said they took out products because building societies are within their local community, just slightly behind are the 37% who say it is because rates are more competitive. Around 31% said they choose building society products because they like the giving back ethos of mutuality while 24% choose societies because of the service. 14% use them because they have a say on how they are run.

The Nottingham’s Chief Executive, David Marlow, said: “I think one of the many things we’ve learnt from the last year is that how organisations support their communities really does matter. Those that have stepped up and put people before profits have made a real difference. That’s the whole ethos of the mutuality model. We are owned by our members so doing the right thing by them and our communities is at our heart.

“Last year our mutuality model allowed us to treble our charitable contributions to causes that really needed our help to support the most vulnerable within our community. We also freezed interest rates for savers and supported mortgage customers. These factors, mixed with our product offering, no doubt contributed to us welcoming 40,000 new customers to the Society in 2020.

“It is clear from our research that it’s this ethos and commitment to local communities that’s as important to customers as the products on offer.”

The Nottingham’s research found that of those people with a product from a building society, 46% have a savings account, followed by 44% who have a current account.  Around 21% have a cash ISA, 13% have insurance through them and 12% have mortgages.

Some 21% of building society customers questioned said they have four or more financial services products from a mutual out of a range of savings accounts, current accounts, mortgages, ISAs, credit cards, loans, or insurance policies.

Customers who have taken out products from building societies in the last 12 months are most likely to have opened savings accounts (53%) or cash ISAs (22%) while 20% have bought insurance policies from building societies.

About alastair walker 6159 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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