Editing Building society (section)

===Demutualisation===
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[[File:Abbey National bank on Commercial Street, Leeds.jpg|thumb|right|The [[Abbey National]] was the first society to [[Demutualization|demutualise]] in July 1989.]]
In the 1980s, changes to British banking laws allowed building societies to offer banking services equivalent to normal banks. The management of a number of societies still felt that they were unable to compete with the banks, and a new [[Building Societies Act 1986|Building Societies Act]] was passed in 1986 in response to their concerns. This permitted societies to '[[Demutualization|demutualise]]'. If more than 75% of members voted in favour, the building society would then become a [[limited company]] like any other. Members' mutual rights were exchanged for shares in this new company. A number of the larger societies made such proposals to their members and all were accepted. Some listed on the [[London Stock Exchange]], while others were acquired by larger financial groups.

The process began with the demutualisation of the Abbey National Building Society in 1989. Then, from 1995 to late 1999, eight societies demutualised accounting for two-thirds of building societies assets as at 1994. Five of these societies became joint stock banks (plc), one merged with another and the other four were taken over by plcs (in two cases after the mutual had previously converted to a plc).

As {{harvp|Tayler|2003}} mentions, demutualisation moves succeeded immediately because neither Conservative nor Labour party UK governments created a framework which put obstacles in the way of demutualisation. Political acquiescence in demutualisation was clearest in the case of the position on '[[Carpetbagger#Etymology and definition|carpetbaggers]]', that is those who joined societies by lodging minimum amounts of £100 or so in the hope of profiting from a distribution of surplus after demutualisation. The deregulating [[Building Societies Act 1986]] contained an anti-carpetbagger provision in the form of a two-year rule. This prescribed a qualifying period of two years before savers could participate in a residual claim. But, before the 1989 Abbey National Building Society demutualisation, the courts found against the two-year rule after legal action brought by Abbey National itself to circumvent the intent of the legislators. After this the legislation did prevent a cash distribution to members of less than two years standing, but the same result was obtained by permitting the issue of 'free' shares in the acquiring plc, saleable for cash. The Thatcher Conservative government declined to introduce amending legislation to make good the defect in the 'two-year rule'.