Mutuals gain in popularity

Mutual societies are among the winners in the economic downturn, as consumer trust in banks and building societies has fallen, according to research commissioned by retirement income specialists, MGM Advantage.

The findings reveal that trust in mutuals, organisations owned by its customers and run for their benefit with no external shareholders, has increased from 10 per cent just over a year ago to 15 per cent now.  MGM Advantage, which is itself a mutual, suggests that consumers are increasingly looking for organisations which put customers ahead of paying dividends to shareholders.

According to MGM Advantage, trust in banks and building societies has eroded dramatically in the past year as the spate of financial crises and the continued economic downturn take their toll on customer confidence.  Last year 45 per cent of people said they most trusted building societies with their money, but that has fallen to 37 per cent - though building societies remain the most trusted place for people's money.  Trust in banks fell from 39 per last year to 31 per cent now.

The survey, which assessed consumer confidence in a range of financial institutions alongside how prepared they are for retirement, reveals that a staggering 13 per cent of UK adults would rather put their cash under the mattress than in a bank or building society.  This has almost tripled from five per cent last year.

Aston Goodey, Director of Sales and Marketing at MGM Advantage, said: "Building societies have always enjoyed a strong reputation as customer-friendly organisations that have avoided external pressures from shareholders.  Likewise, mutuals are in a similar boat and consumers are beginning to appreciate the mutual way of doing business.  As a mutual we are run for the benefit of our members, which means that we do not need to pay dividends to shareholders."

Aston added: "Over the last 18 months more investors have considered mutuals for their investments.  We have benefited particularly from those nearing retirement who have turned to us for secure and more innovative ways to finance their retirement."