Building society savings accounts have received strong backing from an industry group today - although a ratings agency has recently downgraded several firms.
Britain's building societies represent a better option for savers than banks, an industry group claimed today.
According to the Building Societies Association (BSA), the trade association for the UK's building societies, it is the corporate structure of mutuals which makes them better positioned to benefit customers. Specifically, it was claimed that rates were better from building societies because the firms had no shareholders, unlike the publicly-listed banks.
The comments were released in the wake of the decision of credit rating agency Moody's to downgrade its ratings for nine UK mutuals. This effectively means that experts at the agency are less confident about the ability of the companies to repay their debts than before - reflecting worries over the current state of the building societies' balance sheets in the credit crunch and economic downturn.
However, saver confidence in banks has also been battered over recent months by the global credit crunch. Last October, Icelandic-owned savings provider Icesave went into administration - although savers in the firm were subsequently compensated for their deposits.The general "flight to safety" among nervous savers has led to government-guaranteed provider National Savings & Investments receiving record inflows over recent months.
Sentiment has been further affected by the Bank of England's decision to slash its lending rate from five to 0.5 percent to make borrowing cheaper and kick-start the recession-hit economy. Savings accounts have suffered similar cuts as a consequence, meaning that returns on cash deposits have shrunk dramatically.
Rachel Le Brocq, press and public affairs manager at the Building Societies Association, said: "As mutual organisations, with no shareholders to satisfy, building societies can give their members good rates that last the distance - rather than short-term benefits.
"Recent research from the BSA shows that societies outperform banks on many aspects of customer service and value for money is just one of those. In this historically low interest rate environment, getting the most out of your savings is more important than ever."
