Building Society
Everything you wanted to know
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History of Building Societies
The beginning of the building society can be traced back to the First Industrial Revolution in the 18th Century. For a while building societies were simply set up by local organisations. Members would pool funds for building houses and purchasing land, therefore the building societies were usually closed down once every member of the organisation had been housed and had purchased the land they wanted.
However, eventually, building societies started being used by members depositing their money as investment, without any desire to borrow to buy a home. With this, building societies no longer were closed down, or "terminated". Building societies from then on became more permanent as we know them today.
History Timeline
1775 -- The first known society was formed - Richard Ketley's, at the Golden Cross Inn, Birmingham.
1812 -- Building societies were operating under the Friendly Societies Act of 1793 at this point. This changed with the test case of Pratt v Hutchinson, involving arrears in payment to the Greenwich Union. With this came the first formal recognition of building societies' rights.
1825 -- The Jubilee of the industry. There were over 250 building societies at this time.
1832 -- The Great Reform Act was introduced. The number of building societies increased greatly.
1836 -- The Regulation of Benefit Building Societies Act became the first legislation that officially recognised societies for the first time.
1838 -- The Lords of the Treasure issued model rules to be followed by building societies. The rules for building societies were compiled by the Chief Registrar.
1840s -- Members who were not home owners but wished to start saving were beginning to be accepted by many building societies.
1854 -- The idea for permanent building societies was suggested by James Henry James.
1845 -- The first permanent building society is formed. The building societies is called the Metropolitan Equitable.
1847 -- Arthur Scratchley publishes the famous Treatise on Benefit Building Societies.
1855 -- The Liverpool and London Building Society Protection Associations are formed.
1860 -- Over 2000 building societies in England.
1869 -- The Building Societies' Gazette is created.
1869 -- James Higham forms the Building Societies Protection Association which acts as the national body for all building societies..
1870 -- Building societies are included in the enquiries of the Royal Commission. Also in 1870, building societies start to attract gamblers because members of building societies can ballot for loans.
1874 -- The first Building Societies Act is introduced.
1875 -- Building societies are included in the Chief Registrar's Report on Friendly Societies.
1884 -- Building societies are allowed to take members to court if the need arises.
1892 -- The Liberator Permanent Benefit, the largest building society in the country, due to the financial activities of its founder, collapses.
1894 -- Loopholes found in the 1874 act of building societies are closed with the Building Societies Act. It legislated against societies such as Bowkett, Star-Bowkett, Richmond, Self-Help and others, otherwise known as 'promoter' acts since they were founded on gambling principles. The Act was also created to stop the mess with Liberator from happening again.
1910 -- The number of building societies in England is a massive 1723.
1926 -- The Building Societies Protection Association changes its name to The Building Societies Association.
1936 -- A new Building Societies Association is formed due to the previous Association splitting because of the 'Code of Ethics'. However, a splinter group was formed with the new Association called the National Federation of Building Societies.
1939 -- With co-operation of the Association and the Government, the Building Societies Act is formed which restricted the mortgage security that building societies could accept.
1940 -- The Building Societies Association joins up again with the Nation Federation of Building Societies.
1960 -- The power of the Chief Registrar and the restricted size of loans is increased by the building societies Act.
1962 -- A new Building Societies Act is introduced.
1980 -- First Salisbury, the only terminating building society left, is dissolved in March.
1986 -- New Building Societies Act. Gave wider powers to societies in the field of housing and personal banking services. Established the Building.
1989 -- Abbey National passes a resolution enabling it to convert to plc. A new central trade body is formed in August for mortgage lending institutions.
1991 -- With repossessions of houses hit 75500 that year, the Tax-Exempt Special Savings Account is introduced for building societies.
1995 -- Cheltenham & Gloucester Building Society is taken over by the Lloyds Bank Group.
1997 -- The Building Societies Act of 1997 is introduced. It replaces the Building Societies Act of 1986. The Building Societies Act of 1997 gave more power to the Building Societies Commission, which made the entire building society industry far more flexible. Accountability of building societies' boards to their members was also increased.
1999 -- The Tax-Exempt Special Savings Account is replaced by the Individual Savings Account. With more change to the legislation for building societies, building societies are required to have more members present at an annual general meeting to be able to propose a resolution, amongst other building society functions.
2000 -- Bradford & Bingley Building Society converts to plc status. It is the last building society in England to convert.
2001 -- The Building Societies Commission is replaced as regulator of building societies by the Financial Services Authority because of the Financial Services and Markets Act of 2000 being introduced.
2004 -- The Consultation Document is published by Myners.
2005 -- The savings and branch business of Bristol & West plc are bought by the Britannia Building Society.
2007 -- The Building Societies and Mutual Societies Act of 2007 is introduced which allowed the transfers of building societies (and other mutual societies) to the subsidiary of another mutual society. The Building Societies and Mutual Societies Act of 2007 also increased the non-member funding limit to 75% for building societies (and other societies).
2008 -- The Banking (Special Provisions) Act of 2008 is introduced. Banks and building societies were given support if affected by the credit crisis. It was done to promote stability.
2009 -- The Banking Act of 2009 was introduced.