BUILDING SOCIETIES: A QUESTION OF ACCOUNTABILITY?
| Date | 01 June 1984 |
| Author | E. M. McLEAY |
| DOI | http://doi.org/10.1111/j.1467-9299.1984.tb00553.x |
| Published date | 01 June 1984 |
BUILDING SOCIETIES: A QUESTION
OF
ACCOUNTABILITY?
E.
M. McLEAY
The investment and mortgage policies and practices
of
the British building societies affect
individuals, neighbourhoods
and
the economy. Their activities have been subject to serious
criticisms. Building societies, however, are scarcely accountable to their members, despite
their position as 'mutual' organizations; nor are they politically accountable to the electors
through the government. The British building societies present
a
public interest problem.
This article questions whether and how they ought to
be
made accountable for their actions
in order to ensure that they further the public interest.
INTRODUCTION
The British building societies are private organizations which are mutually owned.
Despite the formal accountability of the societies
to
their members, effective internal
control
is
in the hands of the directors and managers.
But
the ineffectiveness of
the formal accountability of these organizations is not the only problem they
present. Their actions, like those of other large and important private bodies,
produce externalities that might justify public regulation and control. These include
the effects
of
their policies upon neighbourhoods and communities, an impact upon
macro-economic policy, interference with other social objectives, and interference
with consumer choice.
Various reforms have been suggested to improve the accountability of the
building societies.
It
has been argued, for example, that their mutuality could
be
enhanced by measures to enable the effective contesting of board elections, especially
through postal ballots, and by improving the amount and quality of information
given to members (we and Young 1981; Williams and Wintour 1979).
In
response
to criticisms concerning the societies' lack of accountability, it was announced by
the Conservative Government in 1982 that there wodd be legislation
affecting
their
constitutional structures.
Also,
some sort
of
appeal system could
be
instituted,
perhaps using the Chief Registrar of Friendly Societies or through an ombudsman
for
building societies.
E.
M.
McLeay
is
a Senior Lecturer in the Department
of
Politics and Government, City
of
London
Polytechnic.
Public Administration
Vol.
62 Summer 1984 (147-160)
0
1984 Royal Institute
of
Public Administration
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