Leeds Building Society is committed to remaining a mutual society and hopes that all prospective new members of the Society share our belief that mutual status is in their best long term interests.
Following a period in which ‘speculative investment’ disrupted the business of the Society, customers can now open some of our savings accounts with as little as £1. These arrangements will ensure that we can deliver value to all, without the need for artificially high minimum investment levels to counter the disruptive actions of speculators. We believe that this will allow us to meet more fully the requirements of genuine savers whom building societies were originally established to serve.
In order to achieve this, all new customers opening a savings account which gives membership of the Society will be required to sign a declaration agreeing to assign to the Leeds Building Society Charitable Foundation any windfall conversion benefits to which they might become entitled in the future. This agreement will last for the first five years of membership, after which the declaration will cease to have effect for the member in question.
There will be some exceptions to this requirement to avoid unfairness, which are described in Your Questions Answered below. Any customer who already holds a membership account as a saver or borrower before 1st March 1999 will not be affected at all by the declaration.
Your Questions Answered
What do we mean by windfall conversion benefit?
This means a benefit in the form of a distribution to shareholding members or depositors under the terms of any transfer of the business of the Society to a company on conversion or take-over.
What do we mean by assigning benefits?
A customer whose membership begins on or after the effective date (i.e. 1 March 1999) will have the same rights as any other member including rights to vote on all issues. However, the declaration will have the effect that, for the first five years of membership, any windfall conversion benefits to which that customer might become entitled would automatically be passed to the Leeds Building Society Charitable Foundation.
What is the Charitable Foundation?
The Leeds Building Society Charitable Foundation is a company registered as a charity which will itself make donations to various charitable causes. The Society will make donations to the Foundation every year. The Foundation will normally only make donations to charities registered with the Charities Commission.
What if I am already a member?
The declaration is included in all investment application forms. However, it is drafted in such a way that if you are already a member through having a shareholding account or a mortgage with the Society before the effective date, then the declaration does not affect you at all.
How long will this arrangement last?
From the effective date, a customer opening a new membership account will agree to assign to the Charitable Foundation any benefit which they might receive if a conversion took place at any time in the five years from the date of account opening. We expect that these arrangements will remain in force indefinitely, although the Society has the power to end the scheme if it decides that this is in the best interests of the Society. If this happens customers who have already signed a declaration would continue to be bound by it but new customers would not be affected.
What are the exceptions?
Existing members before the effective date are not affected by the scheme. From the effective date new mortgage customers would still be entitled to any windfall benefit coming to them as a borrowing member. Holders of Permanent Interest Bearing Shares in the Society will not be affected. Valid applications to open accounts received but not processed before the effective date will not be affected. In order that customers whose accounts are held by others on trust are not unfairly treated, the following will not be treated as new account openings:
- Transfer of account from a deceased member to a personal representative, widow(er) or child under 18 years old.
- Transfer of a child’s or trustee account into a child’s name when they attain sufficient age.
- Transfer of a trust account when the trustee changes but the beneficiary remains the same.
- Death of first named account holder where a second named account holder becomes first named.
The effect of this is that no new five year period will begin as a result of any of these events.
Does this mean the Society is planning to convert?
The Society has never wavered in its commitment to remaining an independent building society. Our results and the value delivered to members show that mutuality works.