The British Bankers' Association's pre-emptive strike, entitled Mutuality Myths, claimed the Consumers' Association's conclusions were the "result of a too-narrow perspective".
Tim Sweeney, director-general of the BBA, said: "Beware the fallacy that competition is decreased by building society conversions."
The report in Which? magazine argues that consumers will pay higher rates for mortgages and reap lower rates on savings from building societies that convert to banks because banks have to pay dividends to shareholders.
The Consumers' Association is alarmed by the conversions of the Halifax, Woolwich, Alliance & Leicester and Northern Rock building societies this year.
It also warns that the ever-shrinking mutual sector, headed by Nationwide and Bradford & Bingley, could be further squeezed by hostile takeovers.
Although technically difficult to implement, Abbey National managed to buy National & Provincial Building Society 18 months ago against the initial opposition of the target's board.
Which? says: "Many people are celebrating windfalls from building society conversions but consumers could end up paying dearly for their short-term financial gain."
The Consumers' Association says the societies which were preparing to convert were already charging more for mortgages than those determined to stay mutual: "Consumers with Nationwide would have paid pounds 220 less interest on a pounds 60,000 loan than with Alliance & Leicester over 12 months, pounds 228 less than with Woolwich and pounds 210 less than with Halifax."
The BBA fired back: "Whatever the fate of the mutuals, competition among other providers will sustain consumer choice. The report's interest rate comparisons are a relatively crude measure of performance for customers, covering a narrow period and a narrow product range."Reuse content