More than 1m savers and borrowers are set to receive a payout averaging £40-plus from the Britannia Membership Reward scheme.
Uniquely among building societies, the mutual lender pays out a share of its profits to customers every year. The scheme was set up more than a decade ago when then-societies such as Halifax were demutualising and handing out shares to their members. The idea was to offer a “mutual benefit” to members without converting into a bank.
This year’s payout of £47m will take the overall amount returned to members above £500m, says the society. Rewards are calculated according to product-holdings, balance and time with the society and are based on a points’ system. This year’s reward is 18p per membership reward point, a cut of 22 per cent.
With each £100 of savings balance equivalent to a point, a two-year saver with a £3,000 cash Isa could see a bonus of just £5.40.
Someone with a £100,000 mortgage, based on a point for each £200 of loan, will receive £90. Rewards are increased by 50 per cent for customers who have been with the society for five years, and doubled for 10 year-plus members.
Britannia says some members earn hundreds of pounds a year. But many savers will receive £10 or less and half the membership get nothing. Neville Richardson, chief executive, says the society is considering improving the deal for savers.
By contrast, recent windfalls paid to savers and borrowers in societies that merge into a bigger entity have been around £200-plus, even for those with balances as low as £100.
The general rule has been that merger bonuses are only paid to members of the smaller society because they have to vote on the tie-up. Savers and borrowers then become members of the enlarged society, giving the potential for a further payout should the new entity merge again, or even demutualise.
The prospect of payouts is now encouraging a new wave of “carpetbaggers” to open accounts with societies, following the free shares bonanza enjoyed by members in the 1990s.
The key rule for qualifying is to have a savings balance of at least £100. And with 59 remaining building societies, experts suggest spreading your savings around to maximise chances of a payout. The table above shows the top-paying cash Isas and regular savings accounts from societies. Opting for these means that even if there is no windfall, savers will still earn a good return.
