Branches & agencies
If you’re wondering “what is a building society?”, it’s a financial institution owned by its members rather than external shareholders. Like banks, building societies offer financial products like savings accounts and mortgages, but their ownership structure is what makes them different.
At Hinckley & Rugby Building Society, being a mutual means our members are more than simply customers. They have a say in how we run the Society and help shape its future direction.
Without external shareholders to reward, we can reinvest our profits into improving our products and services and supporting the communities we serve.
But what does being a member actually mean, and what are the other differences between a building society and a bank?
What is a building society?
So, what is a building society in simple terms? A building society is a mutual financial institution owned by its members. Today, building societies mainly provide savings and mortgage products, helping people save and supporting them with home ownership.
The concept has a long history. The first building societies appeared in the UK in the late 18th century, when groups of people pooled their resources to help members buy land and build their own homes. While modern building societies have evolved significantly, the principle of people coming together for their mutual benefit remains.
One of the biggest differences compared with a traditional bank is that eligible customers become members of the building society. This means they collectively own the Society and, rather than profits being paid to external shareholders, those profits can be reinvested for the benefit of members.
As a mutual, eligible members also have equal voting rights at our Annual General Meeting (AGM), giving them a say in how the Society is run. This includes voting on matters such as the election and re-election of directors, as well as other important governance matters.
At Hinckley & Rugby, membership is typically granted when you open a savings account or take out a mortgage.
Building society vs bank: what is the main difference?
When comparing a building society vs bank, the most significant difference is who owns the organisation and who it essentially operates for.
Ownership: Building societies are mutual organisations owned by their members. Banks are generally companies owned by shareholders or investors.
Profits: A bank may distribute some of its profits to shareholders through dividends. A building society doesn’t have external shareholders to pay. Instead, profits can be reinvested into the organisation, including its products and services.
Governance and voice: Building society members can have a direct role in governance. At Hinckley & Rugby, eligible members can vote at the AGM, including on the election and re-election of directors.
Despite these differences, building societies and banks have plenty in common. Both can provide savings and mortgage products, are subject to financial regulation and can offer eligible depositors protection through the Financial Services Compensation Scheme (FSCS).
What are the main advantages of using a building society?
The mutual model can provide a number of potential advantages, although products, rates and services vary between individual building societies.
Profits can benefit members
Without external shareholders, building societies can reinvest profits into the organisation and the products and services provided to members.
At Hinckley & Rugby, our mutual structure means we can focus on providing long-term value to members through our products, personal service and the communities we support.
A more personal approach to mortgage lending
Many building societies also take a more individual approach to mortgage lending.
At Hinckley & Rugby, mortgage applications are manually underwritten, allowing experienced underwriters to consider an applicant’s individual circumstances rather than relying solely on automated credit scoring.
This can be particularly helpful for people whose circumstances don’t necessarily fit standard lending criteria. For example, Hinckley & Rugby has mortgage options designed for applicants with an irregular or complex income, certain historical credit issues and eligible visa holders. As with all mortgages, eligibility criteria apply, and not every product will be suitable for every borrower.
Supporting local communities
Building societies often have strong connections to the communities they serve.
At Hinckley & Rugby, we have been part of our local communities for more than 160 years. Alongside offering financial products to individuals and organisations, we support local charities, community groups and clubs through sponsorship and colleague volunteering.
We also remain committed to providing face-to-face services through our branches and agencies, alongside telephone and digital services.
Understanding what is a building society and how the mutual model works can help you decide whether this type of financial provider is right for you.
Are there any disadvantages or limitations to consider?
Building societies and banks aren’t interchangeable in every respect, so it’s worth considering what you need from your financial provider.
Building societies traditionally concentrate on savings and mortgages, meaning they may offer a narrower range of financial products and services than some large banks.
Smaller building societies may also have fewer physical branches and a stronger presence within their local communities than national high-street banking groups. However, access isn’t necessarily limited to branches, with providers like ourselves also offering telephone and online services.
Ultimately, there is no one-size-fits-all answer when choosing between a bank and a building society. While both offer savings accounts and mortgages, the range of products they provide can differ. There are also differences in how they are owned, governed, and their overall business focus. Understanding these differences, and considering what matters most to you, can help you decide which is the best fit for your needs.
How safe is your money in a building society?
Building societies are regulated financial institutions, just like banks.
Hinckley & Rugby Building Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Your eligible deposits with Hinckley & Rugby Building Society are protected up to a total of £120,000 by the Financial Services Compensation Scheme (FSCS), the UK’s deposit guarantee scheme.
This means choosing a building society doesn’t mean giving up the reassurance of strong regulatory oversight and customer protections available through authorised UK financial institutions.
Why choose Hinckley & Rugby Building Society?
Our mutual structure and customer focus mean success isn’t measured solely by financial results but by the value we create for our members and the communities we serve. Since 1865, we’ve helped generations of savers and mortgage borrowers through a combination of personal service and financial expertise that continues to shape how we operate today.
We’re owned by our members rather than shareholders. This means we can focus on the real-life needs of the people we serve, with decisions made for the long term rather than short-term financial gain.
Eligible members also have a voice in how the Society is run and are encouraged to vote at our AGM. We also regularly seek feedback through member focus groups, community events and following day-to-day interactions with the Society, helping to shape our products and services. You can read what our members have to say about us on Smart Money People.
Whether you choose to speak to us face-to-face in a branch, over the phone or online, our aim is to provide clear information and personal support to help you make informed financial decisions.
This personalised approach extends to our mortgage lending. By taking the time to understand individual circumstances, we’ve been able to support people whose needs are not always met by the standard criteria or automated processes used by many mainstream lenders, helping many people secure a mortgage and buy their own home.
If you’re looking for a place to save you can explore our range of accounts. If you’re trying to secure a mortgage and facing obstacles elsewhere, mention the Society to your broker. Or, if you’d like to learn more about what a building society is and how it differs from a bank, get in touch with our team.
