Cooperatively owned organisations established chiefly to lend funds for housing. Australian building societies date from the 1840s and are modelled on the UK institutions which originated in the self-help movement of the late eighteenth century. Building societies in the past 40 years have become increasingly important in the Australian financial system, as an alternative source to banks in the provision of housing finance. The societies raise funds from individuals and the wider markets and use these funds to lend to home-buyers. The societies have to compete for funds with other financial institutions such as banks, credit unions and cash management trusts. The number of building societies peaked in the 1970s; between the mid-1980s and mid-1990s, a decade that saw the banking system deregulated and expanded, a number of building societies converted to bank status, a trend that reduced the total number of societies from 71 to 29. However, the status of building societies was boosted by the establishment in 1992 of the Australian Financial Institutions Commission which, for the first time, provided a prudential framework for the societies. See also: Australian Financial Institutions Commission.
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