Is money safe with less well known building societies?

joemardo1

Hi there,

I am thinking of moving my savings from my current building society to avail of better rates, but I notice that some of the societites with better rates are much less well known.

1 is a persons money just as safe with them as its with the big names?

2 is it a troublesome process to open a new account with a different institution? as I understand they now need a lot of documentation like passport pics, national insurance no etc thereby maybe taking up to a month before account can be finally set up, a friend has told me.


regards

ManAtHome

Not sure which ones you mean - most of the better rates seem to be with well-known ones. Only 'odd' one I've seen is the Heritable Bank - think this is Icelandic and not sure it's covered by the investors compensation scheme (1st £2k guaranteed, 90% of next £33k). Had a look at their fixed-rate offers last year, but decided not to bother.

To open an account you basically need to send proofs of name and address (I normally send something from the Inalnd Revenue and a gas or leccie bill). Some let you take these into a local branch (Halifax certainly does) or you post them off and get them back in a week or so. In fact the Halifax one was the longest to open - initially posted the docs off and got them back, but account was stuck on "waiting for docs", so I ended up taking them to the branch. Cash deposited was credited with interest during the wait though.

klondyke

Nowt wrong with smaller building societies per se. As they are mutual (by definition) they don't have to answer to shareholders etc and may therefore be able to offer better rates. Some exist only for their local community; hence not well known outside the area.

Full list of UK building societies and general info can be found at http://www.bsa.org.uk

I believe Heritage is Australian; not a member of BSA.

hth

ReportInvestor

Hi Joe,

Smaller societies often have higher reserve ratios than larger societies.

All are covered by the Financial Services Compensation scheme - 100% of the first £2K and 90% of the next £33K.

And no UK BS has gone under since the Second World War. What tends to happen is that strugglers get mopped up by larger mutuals before they cause a financial panic that would undermine the whole industry.

The past is not ncessarily a guide to the future. As mortgage competition hots up, some smaller mutuals are entering new areas like buy-to-let and commercial property where they have less expertise.

If you post the name of the BS you are considering I could let you know the published state of its reserves was.