Definition
'Mutual' non-profit-making institutions set up to lend money to their members for house purchase. Building societies are 'mutual;' because they are owned by their members, and their members are entitled to their profits and benefits.
The Building Societies Act 1986 enabled building societies to provide a much wider range of services to their members, including unsecured personal loans, insurance policies, house-selling, and pensions. This was designed to put them on a level playing field with banks.
In recent years some of the UK's largest building societies have demutualised and effectively turned themselves into profit-making banks, with their profits being distributed to shareholders rather than their customers.
Building societies are regulated by the Financial Services Authority (FSA).