The Manchester Building Society, a struggling building society with a single branch in Manchester city centre, has warned savers to ensure that their account balances stay below the £75,000 limit covered by the Financial Services Compensation Scheme (FSCS). The society is battling to survive after posting a £4.9m loss for 2015. Chairman David Harding said the long-term future of the mutual is unclear, given the “continuing decline in the scale of operations”, but assured members that the board is confident of a “successful outcome”.
The society’s problems began back in 2013 when new accounting standards required it to change the way it reported the value of its mortgage book, leaving it with inadequate reserves. Since then, it’s been winding down its mortgage book and has ceased offering new loans.
The FSCS pays up to £75,000 per person per institution to cover losses in the event that a building society or bank collapses. Other building societies that have got into trouble have often been taken over by larger ones, and the FSCS has not had to step in, but this is not guaranteed to happen. So savers in troubled firms such as the Manchester should always keep a close eye on their balances.