What the pandemic has taught us about financial resilience
Outgoing Chair of the Building Societies Association and CEO of the Yorkshire Building Society, Mike Regnier, shares his thoughts on how his sector has responded to the COVID-19 pandemic and will play a crucial role during the UK's economic recovery | Credit: Alamy
If the experience of the past 12 months has taught us anything, it's the importance of financial resilience. And no group of organisations understands that better than the nation's network of building societies. We sit down with Mike Regnier, the chair of the Building Societies Association, to hear his thoughts on how the UK can build back better
Whilst the nation has struggled with the weight of COVID, the UK’s building societies have quietly continued their work as a critical enabler of the economy. There have been no public fanfares or political tributes to this particular set of essential workers, but they have been there throughout the crisis, on every high-street, in every town, up and down the country, supporting savers and borrowers.
As Regnier talks me through the way that building societies have responded to the pandemic, it is hard not to be impressed. Throughout the current crisis, the sector’s 43,000 staff have kept 95% of its approximately 1380 branches open for customers, and have ensured that nearly half a million mortgage holders have been supported as household incomes have been put under strain.
What really stands out for Regnier however, is the way that the values of the sector have shaped its behaviour. “I have been genuinely blown away by how people have stepped up. We’ve seen some lovely touches of kindness, – branch staff delivering cash to members’ homes, even in some cases doing essential shopping for regular members.”
This feels like a peculiarly British success story – quiet, unassuming, and managing to combine traditional values with the most modern of approaches. In financial terms, during the war on the virus, the building society sector has been our flotilla of ‘Little Ships’.
If we are going to build back better, supporting a savings safety net for every household has to be a priority
The crisis has also provided an opportunity for learning. When asked what the biggest lesson has been, Regnier doesn’t hesitate. “If the pandemic has taught us one thing, it’s the importance of financial resilience at a household level. We used to be a nation of savers. If we are going to build back better, supporting a savings safety net for every household has to be a priority.”
Regnier acknowledges there are limited ways for government to support savers in an era of historically low interest rates, but he also points to the success of current workplace schemes such as stakeholder pensions, models that Credit Unions and Building Societies have a long tradition of supporting.
To Regnier this is another clear example of the way in which the roots of the sector are now finding a new resonance and relevance in the post-COVID era, reaching beyond the older demographic that was the traditional customer base of building societies. “Our outcomes are really well aligned with that increasing focus on social purpose,” he says. “We’re seeing that really resonate with younger people in particular”.
It is in areas like these, where Regnier sees the unique ownership model of building societies as providing a model for a broader economic reset of how the country operates.
For this to happen though, he is clear there needs to be active support from government. With some frustration, Regnier contrasts the swiftness with which the sector developed new approaches for mortgage deferrals to the sluggishness of the government Support for Mortgage Interest scheme, for which there is currently a 39-week waiting list – a waiting time that he would like to see slashed to 13 weeks. “If we as a sector can step up and introduce a new process in a matter of a few weeks, it is a shame that the DWP hasn’t managed to react in the same way,” he tells me.
He also sees opportunities too, with the exit from the EU opening up possibilities for a new regulatory landscape. “One of the big benefits for the UK, now we are outside the clutches of the EU, is that that we can pursue our own destiny on regulation”, he argues. “We don’t want to make it weaker, just simpler and more proportionate, – particularly for smaller firms.”
It is clear that cutting unnecessary red-tape is essential if the UK is going to recover quickly and build back better. Nowhere is this seen more clearly than in the housing sector, where Regnier argues, innovation provided by a diverse base of lenders is critical to supporting people into home ownership.
As with the rest of our conversation, Regnier zeros in on the diversity of the sector, and the agility of smaller businesses to be drivers of wider innovation. “The beauty of 43 building societies is we can offer much more tailored solutions,” he tells me. “We can hunt out parts of the market that aren’t well served, and provide bespoke solutions for buyers that don’t fit a particular mould”.
Throughout the interview, these are themes that emerged time and again, – vision, values, diversity, flexibility and innovation. For a sector which can track its own roots back to the late 18th century, it increasingly feels like building societies are now putting forward a very modern offer, not just to their members but to the nation as a whole.