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Are your building society savings safe?

Today's report from Moody's and the subsequent reduction in debt ratings has caused major concern among those with investments and savings in the UK building society sector. While the Building Societies Association has come out in of support the sector as a whole, suggesting that the report from Moody's is "over pessimistic", the fact that the red pen has been taken to the sector as a whole is worrying. So is your money safe with UK building societies?

Interestingly, while Moody's has highlighted a number of perceived weaknesses in the sector, the Financial Services Authority does not appear to share the same concerns as the leading debt agency. As mentioned by directors of the Chelsea building society the sector as a whole, and individual building societies, are regularly "stress tested" by the Financial Services Authority. So far we are not aware of any building societies which have failed these stringent stress tests and been deemed "in danger" by the FSA.

As we saw with the initial demise of Northern Rock, there is every chance that investors in the building society sector will become more concerned over the next few days which could in itself cause significant financial problems for some of the smaller building societies. We now need the FSA, the Bank of England and the UK government to confirm the safety of the UK building society sector and the fact that, if required, rescue funding will be made available.

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