Leeds & Holbeck Building Society

...a good look at the Leeds and Holbeck Building Society. It looked good.

I’m sure you’ll have heard of Leeds, but unless you live in this part of the world, you might not have heard of Holbeck. Nowadays it’s a suburb of Leeds, but in 1845 it was a bit, well, outlying and it was here that the Leeds Union Operative Land and Building Society was formed. Members contributed towards shares and when there was sufficient money available a ballot ...
...before the founding of the Leeds and Holbeck Building Society in 1875.

For years it rather suffered from being “the other one” in Leeds, which was dominated by the Leeds Permanent Building Society, although this has now been taken over by the Halifax and is part of a PLC. The Leeds and Holbeck’s still there though and with its 57 branches and more than half a million members it’s the UK’s eighth largest Building Society.

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Each year, around about the second week in April, I open a mini-cash ISA (that’s an Individual Savings Account, by the way) and back in 2000 I took a good look at the Leeds and Holbeck Building Society. It looked good.

I’m sure you’ll have heard of Leeds, but unless you live in this part of the world, you might not have heard of Holbeck. Nowadays it’s a suburb of Leeds, but in 1845 it was a bit, well, outlying and it was here that the Leeds Union Operative Land and Building Society was formed. Members contributed towards shares and when there was sufficient money available a ballot was held and the funds were advanced to the winning member to enable him to buy property. This went on until all the members had the money to buy a property and then the Society was wound up. This happened four times before the founding of the Leeds and Holbeck Building Society in 1875.

For years it rather suffered from being “the other one” in Leeds, which was dominated by the Leeds Permanent Building Society, although this has now been taken over by the Halifax and is part of a PLC. The Leeds and Holbeck’s still there though and with its 57 branches and more than half a million members it’s the UK’s eighth largest Building Society.

So why did I think it looked good? Well, to begin with it’s a mutual – that’s a Society which is run on behalf of its members rather than a PLC (such as the Halifax or Abbey National) which is run for the benefit of its shareholders. Now when this works well it can be a decided advantage. A PLC has to pay dividends to its shareholders out of profits and generally this reduces the interest available to depositors and increases the interest charged to borrowers. Not having to pay shareholders should, in theory, mean more generous rates of interest all round.

It could also mean that there might be a windfall for some members should the Society convert to a PLC at some point in the future, although members joining after 1999 have to have been a member for five years before they can qualify for a windfall.

The next reason that I thought it looked good was that having looked at the rates of interest it had been paying for a few years I realised that it was always just about 0.1% or 0.2% behind the market leader, but the market leaders would keep changing. Some Banks and Building Societies offer accounts with a generous rate of interest which then drops dramatically after a few weeks or months, but people don’t move the funds, either through apathy or because they don’t realise the implications of the rate changes. Chasing the market leaders is a fine game to play if you want to be constantly watching the rates your money is earning, but if, like me, you want to invest your money and be reasonably confident that it’s earning a good rate of interest then you’re often better going for a steady runner-up.

Why did I want an ISA? Well, mainly because the interest on the account is paid tax free and you don’t even need to mention it to the Inland Revenue. This could be particularly important for pensioners who qualify for an increased personal allowance for tax purposes, which would be reduced by any taxable interest. It’s also important if you’re a higher rate taxpayer who would otherwise pay 40% of any interest received back to the taxman. ISAs were introduced by the current Labour government to replace TESSAs (Tax Exempt Special Savings Accounts) the brainchild of the previous Conservative government.

The aim was to get people who hadn’t saved before to get into the habit. Apparently one of the reasons that people hadn’t been saving was that it all seemed too complicated and the ISA was introduced with certain “standards” which would enable people to see what they were getting. These became known as the “CAT Standards” after the initials of the main components; Charges, Access and Terms. Charges wouldn’t apply to cash ISAs, but under “Access” the Standards require that you should be able to get at your money within 7 working days. The Leeds and Holbeck mini cash ISA offers instant access. So far as terms are concerned a minimum transaction of no more than £10 would satisfy the standards, but the minimum deposit here is only £1. Interest is guaranteed to be no more than 2% below the current Bank Base Rate which complies with the standard.

The application process was as uncomplicated as it’s possible to be given the necessity for the Society to comply with the current anti money laundering legislation. I provided two forms of identification along with my application form and cheque and the passbook was back in my hands within two working days. Unfortunately it's not possible to download the forms from the website for completion, presumably because of all the different conditions attached to each account, and the forms have to be obtained from the Society. Each time that I’ve had cause to contact the Society - usually because I’m making a deposit or wanting interest entered - the enquiry has always been turned around within a couple of days.

I’ve never actually been into one of the branches, but I recommended the Society (and in fact this account) to a friend who prefers to do all her Banking in person – I prefer to trust Royal Mail! My friend has been very impressed with the service that she gets in the local branch and describes the staff as friendly and efficient.

The Society offers four tax-free accounts – the Instant ISA, the Loyalty ISA and a TESSA ISA and TESSA Loyalty ISA. The TESSA accounts can only be opened with funds from a maturing TESSA account. All are essentially the same account. In the Tax Year that an account is opened it is either an Instant ISA or a TESSA ISA. If it remains open in the following Tax Year it becomes a Loyalty TESSA or a TESSA Loyalty ISA and qualifies for a higher rate of interest. Currently the bonus is 0.2%. The basic accounts are currently paying 4% and the Loyalty Accounts 4.2%. The current market leader is Safeway’s (yes, the supermarket) which is paying 4.5%. HSBC is paying 4.35%. (Source: http://www.moneyfacts.co.uk/).

A Fixed rate ISA offered by the Society was “the best performing account of this type available from a Building Society in 2001” (source: http://www.leeds-holbeck.co.uk/itpays/mutu_frm.html)

There is a web-site at http://www.leeds-holbeck.co.uk/welcome/we_frm.html, which I found to be a little slow-loading: I’d gladly forgo the snowflakes which currently float across the homepage for a little more speed. The site’s informative rather than interactive and I think better organisation on some of the screens could have avoided horizontal scroll bars. It does, however, seem to be regularly updated.

I’ve only had one occasion to contact the helpline (0113 225 7777) and that was when I made my request for the initial application form. It wasn’t rocket science but all went smoothly and efficiently.

The Coventry Building Society adorns all its correspondence with the legend “TLC not PLC” and fails to provide on either front. The Leeds and Holbeck asserts that “It PAYS to belong” – which it seems to manage quite well.

*****

This opinion only covers the tax-free accounts offered by the Leeds and Holbeck. If you want opinions about other aspects of the Society they are to be found under Finance & Services » Banking & Personal Finance » Accounts
 

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