August 12, 2011 6:25 pm
While the number of building societies has fallen from 100 to 48 since World War II, their conservative business model is little changed. Commercial lending is still limited to a quarter of all advances, and half of all funding must be from customer deposits.
However, mutual societies are criticised for their lack of transparency and democracy.
In the absence of critical oversight, directors’ pay can be as high as that for bankers, as a proportion of the asets they oversee. This has now led to opposition to pay rises at the Skipton Building Society. At Norwich & Peterborough, members angry about money lost through investments in Keydata were denied access to a report that N&P’s own compliance team had issued in 2007, warning about the risks. At West Bromwich Building Society, where bad debts have seen Pibs coupons cut from 6.15 per cent to 1.5 per cent, relatively high executive salaries have been paid.
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