THE days of multiple windfalls are long gone, but since Standard Life, the insurer, announced that it is renouncing its mutual status after 179 years, life insurers and building societies have again come under scrutiny as investors eye possible payouts.

The remaining mutual life insurers, such as NFU Mutual and Royal London, have come under huge financial pressure as sales of with-profits policies have collapsed. But mutuals are standing firm. At the Building Societies Association (BSA) annual meeting this week, the UK’s 63 building societies reaffirmed their confidence in mutuality and its benefits.

Rachel Blackmore, of the Building Societies Association, says: “Building societies do not have to pay dividends to shareholders. Banks do, and as a result their costs are about 35 per cent higher. Customers ultimately cover these costs while mutuals can concentrate 100 per cent on providing good value for members.”

But do mutuals really deliver the best deals to savers and borrowers, or is mutuality just another marketing ploy? Times Money examines how the offers compare.

Savings

Mutual life insurers tend to offer higher payouts on their policies than their listed competitors, with Liverpool Victoria and Royal London paying out about £20,000 more on a 25-year £50-a-month endowment than Legal & General this year.

Building societies offer better returns than the big banks, too. As the high street banks were reporting record profits this year, savers were reaping the rewards of mutuality. A recent survey of cash mini-Isas by Moneyfacts, the financial research firm, showed that building societies paid savers the best returns. Of the top 20 cash mini-Isas, 16 were sold by building societies.

Mutuals do not have such a stranglehold over the best-buy tables for instant-access accounts. But they perform just as well as the banks. In a survey of 14 of the top-paying no-notice savings accounts by Moneyfacts, half the accounts were offered by building societies. In a similar survey of notice accounts, eight building societies made the top grade.

However, the societies themselves concede that they cannot currently match the generous tax-free returns available from National Savings & Investments.

Mortgages

Homebuyers looking for a mortgage would also benefit from choosing a mutual lender. Chase De Vere Mortgage Management, the mortgage broker, says that five of the top six two-year fixed-rate mortgages are offered by building societies. The drawback with some of the smaller lenders is that their deals are sometimes open only to those who live in the immediate area.

The banks put up better competition on discounted rates. Newcastle Building Society pips Alliance & Leicester with a two-year discount of

3.8 per cent, while Portman falls behind A&L’s 3.84 per cent by just one hundredth of a percentage point.

Homeowners with a mutual loan pay less if it is pegged to a lender’s standard variable rate (SVR). Although egg, the internet bank, and HSBC, the high street lender, grab the top two places in the Moneyfacts survey of SVRs, the mutual lenders dominate the top ranks of the list. Of the 25 cheapest SVRs, 17 are from mutuals.

Good rates are not the only benefit for building society borrowers. Simon Tyler, of Chase De Vere, says: “Building societies tend to be more patient with borrowers in financial difficulty, whereas banks may repossess relatively quickly because they have shareholders to satisfy.”