Customers flock to security of building societies

Building societies are counting the cash as savers flock to them for refuge from the credit crunch.

In the first half of 2008, nearly £6.3bn of customer money flowed into savings accounts at the UK's 59 building societies. This compares with just £3.8bn for the same period last year – before the Northern Rock crisis and the credit crunch hit home.

Adrian Coles, director at the Building Societies Association, said that against a backdrop of "economic uncertainty and stock market turbulence", people saw building societies as safe places for their cash, with brand names they can trust.

However, lending by building societies slumped from £8.4bn during the first half of 2007 to £3.4bn between January and June this year.

Meanwhile, the Halifax bank says it has reunited more than 7,000 of its customers with £16.6m of forgotten cash held in "dormant" savings accounts. The Halifax has been advertising for people to come forward to claim their cash, and plans to roll out a fresh campaign next month. It is also trying to trace customers using information held by the credit agency Experian.

But the bank admits it has a long way to go as it holds more than 150,000 dormant accounts, though many of these will be in the names of customers who are now deceased.

An account is deemed dormant after the bank has not had any contact with the customer for a number of years.

Next year the Government plans to roll up all the money held in dormant accounts in the UK and distribute it to good causes. However, if they rediscover their cash, the rightful owners will still be able to come forward and claim it, even after it has been moved into the scheme.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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