Established in 1922, MBS was a member of the Building Societies Association and Financial Ombudsman Service, as well as the FSCS deposit guarantee scheme.
As a mutual, it was owned by and operated for its members. The society claimed to operate a streamlined organisation, based in the heart of Manchester, which allowed them to keep costs to a minimum and pass on the benefits to members.
From 2016, the society was instructed by its regulator, the PRA, to no longer undertake new lending on the basis that it had insufficient capital on its balance sheet to mitigate risks of new business. A capital shortfall as a result of historic accounting errors was blamed. Nevertheless, the society continued to service mortgages issued before 2016, accepting new deposits and applications by individuals to open personal savings accounts. It retained statutory minimum deposit insurance for its members. However, the society stopped paying PIBS holders interest in 2016.
The society's management took former auditor, Grant Thornton, to court, claimed it had acted negligently and ultimately caused the capitalisation concerns. Towards the end of 2018, they were awarded a negligible sum versus the initial claim, and forced to pay Grant Thornton's costs which were far in excess of the award. The society took this decision to the Supreme Court where in June 2021 the lower court's decision was overturned. The society confirmed at the start of 2019 that there continued to be uncertainty around its long-term future.
The society were subsequently audited by KPMG, shortly after which they were replaced by PwC.
Unusually for a UK-based organisation, the society historically offered its members lifetime mortgages against properties in Spain, a form of indebtedness taken on in later life with the aim of never making interest payments or paying down the principal in the borrower's lifetime. On death, lien on the property continues to be held by the society until full repayment is made.
In February 2023 it was confirmed that the society had agreed to merge with the Newcastle Building Society.[2] The merger was completed on 1 July 2023.[3]
