If you’re anything like me (and if you are, I’m sorry, and have you tried therapy?) then you’re well-acquainted with those online tables of the top savings accounts. But have you considered smaller building societies that might not make these lists?

We all know the drill in 2024. You need somewhere to park your cash. An account with an interest rate that sees your stash nibbled at rather than swallowed up by the Inflation Monster. 

My personal go-to are the tables updated by the Money Saving Expert team. But there are lots of others. Search for ‘top savings rates’, and you’ll get up-to-date results. 

The top scorers are usually online challenger banks. Mostly they’re absolutely fine. Just check any potential candidate has the full FSCS protection of £85,000 – especially if it sounds like something Del Boy threw together in a get-rich-quick scheme.

(“Rodders, what’ll we call our bank? Monzo? Nah – how about Pockit?”)

However I’m going to make the case that you should consider your local building society.

Rate expectations

National building societies (BS) are included in those Best Buy tables, alongside banks new and old.

For instance, top BS picks as I write include…

• Leeds BS (paying 4.67%)
• Yorkshire BS (paying 4.35%)

…which are respectable enough, though they can’t compete with the likes of Trading 212 and Moneybox, which both tout 5.17% right now. (T&Cs apply with all these accounts, and that Trading 212 link is monetised so The Investor may be able to buy an M&S Meal Deal this weekend if you sign-up!)

What the tables might not show you is the best rate offered by your local building society.

And you could be surprised at just how competitive these can be. 

What are building societies?

I think of building societies as slightly more cuddly banks.

Rather than being run for the benefit of shareholders, as banks are, building societies are accountable to their members. And the members are their customers. 

The first society was formed in 1775 in Birmingham, with recognition of the nascent industry coming with The Regulation of Benefit Building Societies Act in 1836. The next 200-odd years saw more legislation and regulation, with the sector hitting its high-water mark in 1986. That year The New Building Societies Act gave them the option to become banks. Over the next few years many did just that.

So don’t be fooled by a local-sounding name from yesteryear – like a fancy surname retained since the Norman conquest – because you may be looking at a bank in sheep’s clothing.

For example, when I was a kid in North East England we had accounts with the Halifax Building Society. But while I was a teenager and wasn’t paying attention, Halifax went to the dark side. It ‘demutualised’ and turned into a bank. Others followed suit.

However not all building societies did the (mis) deed and there are plenty left today.

Surviving building societies tend to have a local focus. They usually have a town or city in their name.

Again though, not always. Nationwide Building Society is, as its name suggests, a nationwide mega-building society. And while the Teachers Building Society says it reserves its best rates specifically for teachers, anyone else is also welcome to open an account.

Beware the bankers

I’m not saying all banks are sharks nor that all building societies are cuddly teddy bears. That’s not true.

In fact I tend to err on the side of believing that every big organisation is out to get me.

I’m just saying that these days my local Halifax branch won’t let you go to a counter unless you’ve first run the gauntlet of three different iPad-wielding staff members – each time announcing your financial business to every curious onlooker perched nearby on the soft-play sofas.

My mother’s been trying to make it to the counter of Halifax for two years. 

Kafka would be taking notes.

What are the advantages of building societies?

Sometimes building societies have savings rates that equal the top online banks, and mortgage offerings that are just as good or better than other brokers. Other times they come close.

My point is they are definitely worth checking out. Yet they don’t often show up in comparison sites or tables. You have to do the leg-work yourself.

The good news is that you don’t always have to live nearby. These days most building societies have useful websites. Some – like Yorkshire BS and Leeds BS – enable you to open accounts online even if you don’t live in the area.

And yet… there’s also a case for getting up from your sofa (did I hear you actually gasp there?) and wandering along to your local high street to have a chat with the building society folks.

Assuming you a) have a local high street that isn’t derelict and b) have a building society with a building.

Field report

The last time I went out exploring – to open a cash ISA at my local building society – I was armed with info from its website, only to be told: “Oh, those were yesterday’s figures. This morning’s issue of the account has a higher interest rate”.

So I came out happier than I expected. A rare situation in dealing with banks, I’ve found.

They sometimes chat to you, too. You can go in, sit in the warm for a bit, and talk to someone about money. There’s a coffee machine in the corner. They’ll occasionally offer you a cup while you wait.

People really seem happier in my local building society. It’s like a weird banking utopia.

Do building societies have any disadvantages compared to banks?

Building societies don’t have as much to offer as banks. They’ll do savings accounts (including ISAs) and mortgages, but many don’t do more than that.

If you want a current account and lots of additional features, you’ll probably have to look elsewhere.

Building societies aren’t usually a one-stop-shop then. They’re more targeted at a particular strand of your financial management.

Also, their online offerings can be pretty limited. You might be able to check your account online, for instance, but not actually move your money around much without going into a branch. For some people that’s a huge disadvantage.

However I find that the relative simplicity of building societies works well for me in some situations.

For instance, last month I gave my 12-year-old son his first prepaid card. He was off on a school trip abroad – don’t even get me started on how much that cost – to a country that doesn’t use cash very much. The kids were advised to take a card for buying snacks and souvenirs. 

Naturally getting my son equipped wasn’t a smooth process. I had to get a card for myself too, so that I had a parent account for the child account. (And ever since I did, it’s been spamming me with ads for ‘easy investing’ and ‘want to buy gold?’).

But eventually both cards were set up. My son now has a card loaded with donations from his grandparents to take on his trip.

Slower and steadier saving and spending

The worrying thing is that my son loves his card. He carries it everywhere he goes. I think he’d sleep with it if I let him.

Sometimes he stops by McDonalds on his way home from school to buy a drink just because, he says, “It’s fun to use the card”. 

Okay, I can see why. You select something on the big shiny ordering machine, tap your card, and like magic somebody brings you a large Sprite Zero. That was science fiction when I was twelve.

But the money doesn’t seem real to him. The can of Sprite does, but the cash that paid for it is just a number that changes on a phone screen. For those of us who are old and grey (just a bit grey in my case, honest), it’s easy to make the connection. But for kids growing up in an increasingly virtual world, it’s different.

The building society approach counters that. It slows things down.

If his grandmother gives my son a £20 note, I’ll take him to the building society with his passbook. He hands in the £20, his book gets stamped, and he can see the physical money transferred to a number on the page. If he wants to do anything with that money, he has to go into the building society and ask.

There are levels of checks that slow down the immediacy of spending. As a parent I like that a lot.

Why I like to support my building society

There are other benefits to using your local building society

As already mentioned, in my neighbourhood the benefit is physical branches. My local BS – Newcastle Building Society, if you’re interested – hasn’t just hung on to a high street presence where banks have fled. It’s actually expanding its operations, opening new physical branches around the region. 

Then there’s the community side. 

Building societies can offer some interesting services. My local branch, for instance, provides a meeting room that you can book free of charge. I was so impressed by the offer that I immediately started trying to think of people I could assemble for an official meeting of some kind. (It didn’t work, of course – there’s nobody in my town who wants to meet with me except my cousins. And I’ve been crossing the street to avoid them for years.)

Now, I don’t know anything about high-level finance. I’m just a regular person in a regular town, doing regular shopping in a run-down high street that has more nail bars than banks.

But it seems to me that building societies are becoming increasingly attractive to people because they’re looking at what their customers want, rather than trying to tell their customers what they should want.

BSs: no BS

There’s no denying I’m a dinosaur about a lot of things. 

I don’t have the new Vanguard app. (Why would I want to check my investments on the bus?)

I resent the ubiquity of QR codes. (If I have to scan a QR code for your information, then I don’t want your information).

My approach to change can be best described as ‘grumpy’. 

So maybe I’m missing the advantages of our kids being born digital. Perhaps my views will change in a few years, when newer and more terrifying forms of progress make tappable cards look like Victorian slates. Maybe I’m alone in liking a passbook that can be stamped.

But in this age of online everything, in which you need two-factor authentication to change your socks, I find it strangely comforting to have an account that tucks my money away without any online tinkering.

I don’t think that I am alone. My building society has big posters advertising their use of passbooks, and apparently they attract a lot of new customers. My parents moved their savings from the bank to a building society when their bank phased out passbooks.

Lots of regular people resent it when the relentless march of progress whisks away a system that worked for them.

Anybody else still miss video tapes? Nobody?

Alright, I’m a dinosaur. But there are other dinosaurs out there too.

And in the dinosaur community, building societies are our happy place.

The Amundi Prime Global ETF (PRWU / PR1W) is delisting from the London Stock Exchange (LSE).

Though the ETF will continue life on Germany’s Xetra exchange, you can’t own that version in an ISA.

You can own it in a taxable account. But that will have serious tax implications if Amundi does not gain UK reporting fund status for the Xetra incarnation of the ETF.

Moreover, affected investors are being given just a few weeks’ notice to make consequential decisions, and with scant and confusing information.

Potential issues raised by PRWU owners include:

• Triggering a capital gains tax event if you decide to sell the ETF from a General Investment Account (GIA).

• Not having time to sell PRWU held within an ISA should you miss the relevant communications from your broker, or if you’re acting as the executor of a will.

• Confusion about whether the transfer of the ETF from a Lifetime ISA causes a withdrawal penalty on the government bonus.

• Potentially not being able to sell their ETF for months afterwards if they miss the deadline to sell prior to the delisting event, judging by reports from investors caught up in a previous delisting.

Delisting drama

So why is this happening and what are the rules if it happens to you?

Before continuing, I’d like to thank Monevator readers Peter Rabbit and J. They raised the alarm with helpful comments on Monevator’s low-cost trackers page and via email.

Also, let’s be clear that neither an ETF delisting nor closure means you’ll lose your money, in case you’re worried about that.

The main consequences are:

• Potentially making a loss if you’re sold to cash and end up being out of the market for a time.

• Not being able to access your money for a while if your broker handles the situation badly.

• Being forced into a capital gains event. (Though I think there’s reason to believe that Amundi will reacquire UK reporting tax status for the ETF. I’ll explain why below.)

• Loss of some ISA benefits if sale or redemption isn’t made in time.

Why is the Amundi Prime Global ETF delisting?

In brief, Amundi is moving the ETF’s domicile from Luxembourg to Ireland.

That’s good news for most investors because they’ll pay less withholding tax on the fund’s US securities due to Ireland’s superior tax treaty with the States.

But it’s bad news for UK investors, thanks to our old friend Brexit.

Prior to Brexit, fund firms could distribute their products across European Economic Area (EEA) borders using common passporting rules.

It was easy. No need to delist your ETF from the LSE.

Then, as Brexit approached like a small moon, the FCA invented the Temporary Marketing Permissions Regime (TMPR) to enable business to carry on.

However, TMPR does not cover new financial products registered with the FCA since 30 December 2020.

Want to promote your new EEA domiciled fund in the UK today? Then recognition is yours via the alternative Overseas Fund Regime (OFR).

But alas, the OFR only began accepting applications from 30 September 2024.

In between times, fund providers had to resort to the UK’s ‘Section 272’ recognition process. This choice piece of bureaucracy has been described variously as ‘cost intensive’, ‘time consuming’, and ‘legally expensive’.

Numerous articles quote industry insiders referring to Section 272’s bad reputation and its deterrent effect upon companies wishing to launch new funds in the UK.

Nice work Global Britain!

The OFR is supposed to be a much easier and less expensive route to market. Though still not as cheap and effective as the old passporting regime.

Amundi-ng its own business

Amundi Prime Global’s OFR application is apparently underway. But not in time to enable the Irish version of the ETF to be LSE-listed before the Luxembourg sub-fund disappears.

And apparently Amundi wasn’t minded to hang around on behalf of its UK investors.

Assuming the ETF regains UK recognition, then this ETF will be back on the LSE at some point. But Amundi pushed ahead with the nuclear option anyway, announcing the delisting on 16 October 2024 and giving investors until 15 November to decide if they wish to redeem their shares via the fund manager.

And this timeline was shortened for those investors who report first hearing about the delisting from their brokers some days later.

The impact of delisting on investors

I personally think ISA owners are best off selling the ETF while they’re still in full control of the situation.

The rules on non-qualifying investments1 in a stocks and shares ISA say:

Where the new investments are not qualifying investments, managers must, within 30 calendar days of the date on which they became non-qualifying investments, either:

– sell them (in which case the proceeds can remain in the stocks and shares ISA)

– transfer them to the investor to be held outside the ISA.

LISA qualifying investment rules are the same as for stocks and shares ISAs.

I can’t find out if a broker transferring non-qualifying investments from a LISA would incur a withdrawal charge designed to negate the government bonus.

But that seems probable, otherwise news of the “AWESOME LISA hack you MUST TRY” would probably have gone viral by now.

Meanwhile, there’s quite a bit of guidance out there advising that if delisted shares (remember: ETFs count as shares) are transferred outside of your ISA, then you can’t replace that money without reducing your annual allowance.

In other words, you should sell the ETF while it still resides within your tax shelter.

The consensus view is that your holding’s market value on the date of transfer is your base cost for future capital gains calculations. So you can’t carry over a capital loss from your ISA, but neither should you be stuck with an immediate capital gain.

However, HMRC’s ISA pages are silent on the issue. Or at least I haven’t been able to find the answer within.

And I’d rather not rely on whatever a random broker’s agent or HMRC forum denizen claims that day.

De-list of To Dos

All of which leads me to conclude that the safest course of action is to sell while you can. All other priorities are rescinded.

Once you sell you can then immediately reinvest the proceeds into another LSE-listed ETF that replaces Amundi Prime Global in your line-up. There are plenty to choose from.

I wouldn’t worry about other retail investors doing the same thing. It won’t move the price and is unlikely to nudge the needle much on the spread either. Amundi Prime Global’s spread was around 100th of a percent on 8 November. A non-issue.

In theory, you have until 21 November to sell (that’s the ETF’s last day of LSE trading). But InvestEngine for one told its ISA owners to sell by 31 October or else it’d take action unilaterally around 7 November.

‘Unilateral’ here means your broker sells for you if haven’t opened a (taxable) GIA with them.

If you do have such a taxable account and you don’t sell beforehand, then your broker will instead transfer the new-style Prime Global ETF into your GIA upon completion of the merger. The merger is slated for 22 November but that’s subject to change.

However, it’s a bad idea to let an ETF without UK reporting fund status hang around outside your tax shelters. (See the ‘Taxable account’ section below).

I don’t think you can depend on the extra 30 days the stocks and shares ISA rules imply you get either.

That’s because the communications received by affected investors suggest that brokers will either sell or transfer on their own timeline if you don’t act yourself.

Does delisting affect SIPPs?

Amundi’s notice to shareholders says:

The Receiving Sub-Fund is eligible for self-invested personal pension (SIPP) purposes under UK tax law. Nevertheless, each SIPP provider may impose its own restrictions.

(The ‘receiving sub-fund’ referred to is the Xetra-listed version of Prime Global.)

I haven’t found any reports of SIPP owners being affected. Still, you may need to take action if your broker doesn’t allow you to trade European-listed ETFs.

One broker advises (with reference to shares generally) that you’ll have to call its telephone trading desk to offload delisted stock if you miss the deadlines. A bit tedious and likely more expensive.

Still, if you fancy holding the new ETF and your current platform doesn’t do Europe then you could transfer it to a different broker who does. There are enough decent options, though it does mean incurring charges on another platform.

My own brokers don’t support European-listed ETFs. So personally I’d sell and replace Amundi Prime Global before the last day of trading.

Taxable accounts and capital gains events

Without UK reporting fund status, capital gains are taxed at your marginal income tax rate. Even worse, the CGT exemption allowance does not apply.

Bad, bad, bad.

However, being an unrecognised overseas fund needn’t stop Amundi Prime Global from achieving UK reporting fund status.

Other LSE delisted Amundi ETFs found this happy place in good time.

For example:

• EPRE was delisted on 5 July 2023. The LSE sub-fund merged with versions trading on multiple European exchanges. HMRC states reporting fund status came into effect for those back on 31 January 2018.

• WGES was delisted on 1 February 2024. It merged with its Xetra counterpart which had gained reporting fund status from 17 January 2024.

• RUSG was delisted on 8 July 2024. It merged with its Xetra equivalent, MWOT. Reporting fund status was granted from 8 July 2024.

So anyone who doesn’t want to trigger a capital gains event by selling PWRU / PR1W may not have to worry about UK reporting fund status if they can wait for the Irish incarnation to appear.

In fact, I haven’t yet found an example of an Amundi ETF delisting from the LSE and only leaving behind a non-reporting fund version.

That said, I can’t claim to have searched every instance. And this time might be different.

Obviously this is a tricky decision that could backfire either way. Ideally, Amundi can give you a straight answer about its plans if you need it. You can call customer service on 0207 074 9598 or email Retail-UK-ETF@amundi.com

You can also check which overseas funds have UK reporting fund status by downloading an Excel document from the dedicated gov.uk page. Search the spreadsheet using the fund’s ISIN code.

The Irish version of Amundi Prime Global is not present in the latest update dated 9 October 2024.

Why do Amundi ETFs keep delisting?

Amundi isn’t the only ETF provider to have delisted ETFs from the LSE over the past several years. But it has been hyperactively pruning its range in the wake of its 2022 takeover of the Lyxor ETF brand.

Normally, delistings eliminate niche products that are struggling to make a profit.

However Prime Global has $1.5 billion under management, according to Amundi.

So Amundi is not delisting the ETF because it failed to gain traction in the market. In fact, it’s protecting the fund’s competitiveness by moving it to Ireland.

Amundi has obviously decided that move can’t wait for the outcome of its OFR application. So it’s seemingly not too bothered about losing any UK investors caught in the regulatory cross-fire.

Indeed the company has done little more than provide the 30-calendar-day notice period required. Meanwhile affected owners are struggling with ineffectual communication from their brokers.

All of which makes me think customer service still has a long way to go in the investment industry.

Are other large ETFs at risk?

I’d be surprised if this proves to be a problem that gets notably worse in the future.

The UK is the second biggest European market for UCITS funds (ETFs fall into that category).

Moreover ETF Stream recently quoted BNP Paribas Asset Management’s global head of business development ETF and index solutions, Lorraine Sereyjol-Garros, as saying:

Some clients, such as in the Nordics, Middle East, Latin America, and Asia prefer LSE listings over mainland Europe, so it enables us to target the domestic market and international clients

Thankfully then, we’ve still got market power as a country. It seems likely to me that fund managers who haven’t launched new products in the UK over the past few years were waiting for OFR to go live.

Unsurprisingly implementation kept being delayed, though it seems we’re finally off to the races now.

Be that as it may, delistings are a natural part of the ETF ecosystem. And yet retail investors aren’t always being given enough time – nor adequate information – to confidently respond.

Brokers are on point for this as they hold the direct relationship with the customer.

It wouldn’t be that hard to write a comprehensive guide to delisting. They’re welcome to start with the points raised above.

Take it steady,

The Accumulator

1. Scroll to the Changes to investments held in a stocks and shares ISA section. [↩]

What caught my eye this week.

There is an interesting article in the Financial Times this week that explains that new build properties aren’t as small as we’ve all been led to believe:

It turns out that, rather than shrinking, new homes have become larger.

The frequently used 76 sq m figure is simply wrong and does not reflect the reality of the recent housing market. A housing market analyst tracked the source of this figure to a report published in 1996 that was based on new builds in the 1980s and early 1990s […] the smallest on average of any period.

Unfortunately, the 76 sq m continues to appear in new articles and reports — a true zombie statistic.

Instead, new homes have actually been getting larger and are now slightly bigger, on average, than existing homes.

Apparently Help to Buy – or Help to Buy Bigger, as wags dubbed it – drove the building of more suburban four- and five-bedroom homes, at the expense of fewer city centre flats.

This doesn’t match what I’ve seen in London, of course.

But hey! It’s a big country out there…

Neal Hudson’s article is full of interesting facts. Give it a read if you’re interested in property (and please consider subscribing to the FT if you read a lot of these search links. I do and it’s a treat!)

Breathing space

With Labour aiming to see 1.5m new homes being built – um, someday – I presume this apparent trend for roomier living space will need to be reversed.

Especially as the listed housebuilders’ focus on making bigger ‘executive homes’ targeting DINKYs to rattle around in might be yet another reason why young people find nice no-frills starter flats so hard to snag.

I’m all for higher-density development. Provided the model is classy areas like London’s Maida Vale or Paris’ famously beautiful mid-rise boulevards. Not the high-rise horrors of yesteryear, obviously.

But I suppose that the desirable urban apartment model might face an uphill battle while lockdown – and the near-universal desire for a bit of outdoor space it inspired – is still fresh-ish in our memories?

Have a great weekend.

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