2011 Another Year Another Massive Pay Increase at Nationwide - Make Your Vote Meaningful - Vote "AGAINST" - Boardroom Pay Leaps (Again) While Savings Interest Rates Fall - 2010 Nationwide AGM Jeers - Nationwide Stops Sponsoring Football Millionaires - Profits Plummet at Nationwide but there is no Shortage of Cash in the Boardroom - HM Treasury Consults on Changes to the Mutual Model - Coventry takes over Stroud & Swindon - Skipton takes over Chesham - Yorkshire takes over Chelsea - Norwich & Peterborough to Close 10 Branches - Golden Handshake for Ex-West Brom Chief - Monster pay increases again at Nationwide - West Bromwich saved - Skipton takes over Scarborough - Yorkshire takes over Barnsley -  Robert Sharpe ex Portman CEO takes over as West Bromwich CEO - Nationwide takes over Derbyshire & Cheshire - Fat Cat Pay Rises 14% - Nationwide Members Fined £1m - Nationwide "Proud to be Indifferent" - "A Mockery of Mutuality" - "25% Pay Increase at Nationwide" - £8.3 million pension pot for Chelsea Fat Cat - Hinckley & Rugby and the NHS - Which? reports on Code Breakers - "Fattest of the Fat Cats" (Mail on Sunday) - "Nation wide boys" (The Guardian) - "The Cost of Loyalty" (Mail on Sunday) - "More Tricks of the Trade" (Daily Mail)

Nationwide - "Rethink"
September 2011 - Thisismoney reports "Savers scored a victory today when Nationwide withdrew a sneaky clause on one of its savings accounts following enquiries by This is Money.  Britain's biggest building society is refunding all customers who have lost interest as a result, provided they closed* their account on or after 1 September.  Nationwide had come under fire for a stealthy ploy that robbed up to a month's interest from customers of its MySave Online Plus account".

Thiismoney Report

Over 14,000,000 Nationwide BS members did not vote for any of the board's resolutions last year.

Alan Debenham intends to attend the AGM again this year so you can nominate him as your representative if you wish to do so.  If you have any queries please e-mail Alan Debenham at alandebenham@hotmail.com.

Kent Reliance
January 2011 - The Financial Services Authority today announced that on 24 January it confirmed the transfer of the business of Kent Reliance Building Society to OneSavings plc under the Building Societies Act 1986.

The FSA’s written decision.

Copies of the decision will also be sent to the building society and to the one and only member of the society who made representations.

FSA Press Release

Which? Report
January 2011 - The consumer group Which? has published the results of a survey that they have carried out which shows that loyalty doesn't pay for members of building societies and banks.  The survey showed that two thirds of accounts that have remained open for six years or more now pay only 0.1% interest.  This is despite the fact that the bank rate is 0.5%.

Which? report

Members demonstrated their anger at the highly inflated payouts that the directors continue to give themselves but the same old and well worn record was played to justify the fat cat pay.

What would the Chief Executive stop doing if there was no such thing as a bonus?

Unfortunately the chances of receiving meaningful, acceptable and non-evasive answers to these questions are far lower than the chances of winning the National Lottery.

So much for the philosophy

Boardroom Pay
April 2010 - The Mail on Sunday questions whether directors deserve their pay increases when profits are down and savings interest rates are at an all time low.  Members have an "advisory" vote on boardroom pay - how should it be used?

Mail on Sunday Report

Nationwide
April 2010 - Preliminary results show profits are almost down to half of the previous year.

Nationwide Report 

HM Treasury Seeks the Views of Members
March 2010 - In 2009 the Government announced the formation of an expert group of key stakeholders to advise on strategic issues affecting building societies.  The group consisted of representatives from building societies, industry experts from professional services firms, the Building Societies Association and the Tripartite Authorities (Bank of England, FSA and HM Treasury).

The document states "Separate to this, The Walker Review (2009) highlighted the need to address the issue of corporate governance across the financial services industry.  The expert group provided examples of best practice and participants highlighted innovative ways to engage with members, such as those included in the BSA 'Conversations with members' report*.

In the 2009 Pre Budget Report the Government proposed the introduction of a new governance code for building societies and other financial mutuals and the Government has since commissioned a working group led by the Financial Reporting Council to take this forward".

HM Treasury has now issued a discussion document entitled "Building Society Capital and Related Issues".  The document seeks the views of members of building societies (amongst others) on matters of governance, shared operational services, pooled funding, and capital.

One of the suggestions put forward by the discussion paper is for Core Tier 1 capital instrument holders to be given the right to nominate a board member.

Responses or enquiries should be sent to:

Ben Crosland
HM Treasury
Building.Societies@hmtreasury.gsi.gov.uk

The window for responses closed on 22 June 2010

Note
The consultation has received very little publicity so of all the millions of members of building societies very very few will be aware of this document.

We recommend that you respond to this consultation particularly on the lack of mutuality and accountability within the building society industry.

Note: The Walker Report states: “There is, however, palpably no scope for complacency, and the extreme severity of the recent crisis and inadequate performance of many BOFI [banks and other financial institutions] boards, means that no opportunity for improvement, however radical, should be beyond the scope of this Review”.

So changes to the numbers of nominating members should be a definite requirement for both member resolutions and member board candidates.

*The BSA 'Conversations with members' report dated 20 January 2010 details (repeatedly) all the wonderful things that directors of building societies do except allowing members to have any influence on the corporate governance of their societies or holding directors to account.  Needless to say the report contains nothing on the subject of member resolutions.

Consumer Focus - Cash ISA Super Complaint
March 2010 - The consumer watchdog organisation Consumer Focus has submitted a "super complaint" concerning cash ISAs to the Office of Fair Trading (another consumer watchdog!).

Consumer Focus has concerns including the offering of interest rates on ISAs for a limited period which then fall to significantly lower rates, and the barriers consumers face when switching to more competitive cash ISA accounts.

The OFT will then consider the issues raised in order to establish whether any feature, or combination of features, in the relevant market is or appears to be significantly harming the interests of consumers.

The OFT says it will invite interested parties (that must surely be the majority of people who have cash ISAs) to provide evidence which may be useful to the OFT's assessment.  It will publish a response to the super complaint within 90 days.

OFT and Cash ISAs Super Complaint

Stroud & Swindon and Coventry
March 2010 - Stroud & Swindon BS is to be taken over by Coventry BS subject to the usual voting procedure.  There will be no windfall payments for members as is now the norm.

Quote from the S & S announcement: "The merger will have many benefits for Stroud & Swindon’s members including an improvement in rates for a large proportion of our membership, access to a broader branch network, ongoing excellent quality service and enhanced financial strength going forward".  This seems to assume that S&S members were not aware of the better deals available at other building societies.

David Hill, former chief executive who left rather suddenly in August last year, is reported to have received a total pay-off of £482,550 for the year.  Hill received the compensation pay-out despite resigning and despite the society recording losses of £7.3 million.

Members will be permitted to vote against boardroom pay increases but as usual the vote will not be binding and as usual most votes will be in favour.

Stroud News & Journal
S&S Announcement

West Bromwich
March 2010 - West Bromwich BS is to close 11 branches in a bid to reduce costs.  This action may result in some compulsory redundancies.

West Bromwich News

Saffron, Ipswich and N&P
February 2010 - Saffron BS, Ipswich BS and Norwich & Peterborough BS are seeking to cut back on costs by combining back office functions.

Skipton and Chesham
February 2010 - Skipton BS is to take over Chesham BS (currently the oldest building society).

Only Chesham members will be allowed to vote and there will be no payouts.  Skipton members do not get a vote.  Skipton will retain the Chesham brand name for at least one year.

Chesham BS Report
Skipton BS Report 

Moodys Forecasts More Mergers
February 2010 - Moodys Credit Agency has forecast the need for more building societies to merge due to higher credit losses than previously anticipated and as funding from savers dries up.  The agency predicts that specialist loan sectors, such as buy-to-let and self-cert will come under pressure.  The agency downgraded nine societies in April 2009 including the largest one the Nationwide.

Banking Times report

BSA Report
January 2010 - The Building Societies Association has produced a report that attempts to give the impression that building societies are mutual societies where members have some kind of influence over management policies and decisions or in some way members are able to hold directors to account.

Our Comment
The Government proposes to introduce a corporate governance code specifically for financial mutual societies and the timing of this report just happens to coincide with the development of the new code.  It is intended to demonstrate that no change is needed that would make boards accountable to members of building societies.

Hans Christian Andersen could not write a better fairy tale as anyone who has seen the biased voting papers will know or anyone who has even just asked an awkward question at an AGM and obtained the customary dismissive answer knows. 

The report states - "Most societies welcome member nominated directors ..." (that will be the day).   Members must obtain no less than 250 to stand for election to a board and boards will then oppose any member candidate.

No less than 500 valid signatures are required in order to submit a resolution to a building society and the society will then reject the resolution.  There is no mention of member resolutions in the report - wonder why?

The report goes on "Typically, well over 90% of eligible members vote in favour of each of the resolutions at societies’ AGMs".  A chart then shows the highest total turnout was in 2008 at only 19.4%.

BSA Report

Chelsea Members Vote for Yorkshire
January 2010 - Chelsea BS members voted overwhelmingly to terminate the existence of the Chelsea BS and for the society to be taken over by the Yorkshire BS.  The takeover is subject to approval by Yorkshire BS members and then by the FSA.  The Chelsea will disappear on 1st April 2010.

Chelsea Report

Ex-Chelsea Chief Exec Takes Blame for Decline of Chelsea
December 2009 - Richard Hornbrook, former Chief Executive of Chelsea BS takes the blame for the society's demise.

Thiismoney Report

OFT & Nationwide
December 2009 - Following the failure of its case against the Nationwide BS and seven banks, concerning unfair charges on unauthorised overdrafts, the Office of Fair Trading has decided not to pursue an appeal.  The court's decision that the charges are not assessable for fairness on the basis of cost seems a strange one.

Nationwide Building Society Report

"Mutual" Fat Cat Pledges Not to Take a Bonus
December 2009 - Iain Cornish Chief Exec of Yorkshire BS says "I won't take a bonus now, even if I qualify for one, until you can see our members starting to feel less pain themselves".

But annual reports show that other "mutual" fat cats still have their snouts in the trough.

Jeff Prestridge, Financial Mail Personal Editor says "It is time for greed to be eradicated from society boardrooms".

Thiismoney Report

Skipton Sale
December 2009 - Skipton BS has sold off a subsidiary company Callcredit the third largest credit checking organisation in the UK.  The sale is expected to boost Skipton's profits in the order of £100million.  There will be no windfall payments as the funds are needed to boost capital.  The Skipton still has a large number of subsidiary companies including Connells estate agents.

Thiismoney Report

Yorkshire to Take Over Chelsea
December 2009 - The managements of Chelsea BS and Yorkshire BS are in the advanced stages of agreeing a merger.  This will be subject to members' approval but there is doubt about any windfalls to persuade members to agree.

Chelsea Building Societies coffers were severely weakened by a buy-to-let fraud and exposure to the banking collapse in Iceland helped the society to make a loss in its last financial year and in the first half of this year.

Walker Final Report - Corporate Governance
December 2009 - Sir David Walker has published his final report on a review of corporate governance of banks and other financial institutions.

Initially the remit for the review covered only banks, then other financial institutions including building societies were thrown in as an afterthought.  Following which building societies were once again almost forgotten.

The report states: “There is, however, palpably no scope for complacency, and the extreme severity of the recent crisis and inadequate performance of many BOFI [banks and other financial institutions] boards, means that no opportunity for improvement, however radical, should be beyond the scope of this Review”.

That is strong stuff if only it was true - nevertheless once again the outcome is to only recommend further tinkering with the Combined Code.  There is nothing radical about that as it is a routine practice.  In fact it is difficult to find anything in the report that is likely to make the boards of building societies any more accountable and despite all the recent building society failures it is expected to be "business as usual in the boardrooms".

Walker Report on Corporate Governance

Norwich & Peterborough
December 2009 - N & P is to close 10 branches including Chelmsford, Clacton and Colchester.  The management say they are going to confine the society's operations to their home territory although two of those to be closed are on their home territory.

Banking Code
November 2009 - The Banking Code has now been replaced by the FSA's Banking Conduct of Business Sourcebook effective November 2009.

The Banking Code Standards Board has changed its name to the Lending Standards Board following the demise of the voluntary Banking Code.

Coventry BS
October 2009 - Coventry Building Society has secured £350 million in long term funding from the financial markets.

The 10 year bond, only the second to be issued successfully by a UK building society since the start of the credit crunch, was heavily oversubscribed by city investors.

In May 2009 chief executive David Stewart told the Daily Mail "We have no toxic mortgage assets and we don't need capital injections".

See Report Here

Building Societies Attack New FSA Proposals
September 2009 - The BSA has responded to the FSA consultation on plans to provide more protection for savers with a 19 page attack.  The building societies claim a new rule book for the sector would adversely affect competition with banks.

The FSA’s proposals include a clamp down on societies offering high loan-to-value mortgages.  The FSA also wants societies to have senior managers who are sufficiently skilled to oversee any riskier lending.

See Timesonline report.  The Times also reports on rescue plans of Newcastle BS and Chelsea BS.

Swansea BS
August 2009 -  Swansea BS is planning a “major expansion” for the coming 12 months, after revealing a 60% increase in  profits.

The society claims that profits grew to £678,000 for the six months to the end of June, with total assets increasing by 23.2% to £163m over the same period.

See Report here

West Bromwich BS
August 2009 - West Bromwich BS meeting arranged for PIBS holders on 4th September for proposals to vary special conditions of issue of PIBS.

Chelsea BS
August 2009 - Chelsea BS suffered substantial losses mainly but not entirely due to fraud while the directors were busy at the trough - Chelsea Interim Accounts.

In a rather pathetic "Question & Answer" page those directors that have not suddenly departed say  the Chelsea was not the only society to suffer fraud - so that's alright then.

The Chelsea statement says: the fraud “is mainly as a result of the artificial inflation of property values by third party professionals involved in the transactions.”  In theory, the society can go after these professionals and their governing bodies.  Don’t hold your breath.

It will be interesting to see how much loot left along with the departing directors.

Stroud & Swindon BS
August 2009 - The sudden departure of Chief Executive David Hill looks ominous but no adverse reports have been issued by this society yet.

 Watch this space!  

West Bromwich BS
July 2009 - Those members of the West Bromwich BS attending the AGM were told that the board is seeking a new name for the “tainted” and “tarnished” society as part of a planned expansion into Birmingham city centre.

Why could they not have told everyone?  Perhaps the name selected might well be the "Nationwide" or given the record golden handshake provided to the previous chief exec it could well be the Snouts in the Trough Building Society.

Unlike the change of status from mutual to semi-mutual any change of name will require the approval of the members of the society which is far more important.

Dunfermline Building Society
July 2009 - Scottish Affairs Committee concludes that the FSA failed to give adequate specific warnings to the Dunfermline Building Society prior to its collapse.

"Warnings need to be specific to the institution being addressed and must be given in terms that savers and investors can understand.  The FSA should further ensure that the institution communicates these warnings to its members".

"Whatever the shortcomings of the Tripartite Authorities' communications with Dunfermline Building Society, it was the Board that had dug the hole in which the Society found itself".

Walker Report on Corporate Governance
July 2009 - Sir David Walker presented 39 recommendations designed to improve the accountability of banking boards included among them are:

• board level risk committees to be chaired by a non-executive, with these to have the power to scrutinise and block big transactions.
• remuneration committees to have the power to scrutinise firm-wide pay, including that of high-paid staff not on the board.
• bonus schemes for all highly-paid executives to have a significant deferred element.
• publishing the pay levels of employees who are paid more than 75% of executive director median in bands and to be subject to FSA scrutiny.
• the pay of highly-paid executives to be subject to greater scrutiny.
• the chair of the remuneration committee to face re-election if the report receives less than 75% approval.
• non-executive directors to have regular awareness sessions and spend a minimum of 30 days on the job and to face tougher scrutiny under the FSA process.
• A new role of chief risk officer and a risk committee.
• Investors (institutional shareholders) to engage with companies more actively and sign up to principles with which they must either comply or explain why not.

After the failure of the Dunfermline Sir David’s remit was extended to include all financial institutions – nevertheless the last item above will exclude building society members as usual – although it might perhaps apply to PPDS holders.

The idea of spending a minimum of 30 days at the office must be a great one for some non-execs.  Their immediate thoughts might well turn to thoughts of a massive increase in pay and designing paper aeroplanes to wile away the time.

Sir David will produce a final report in the autumn.

The consultation runs until 1 October - Click here if you wish to respond

West Bromwich BS
July 2009 - The West Bromwich annual financial report reveals that the former chief executive of the West Bromwich Building Society Stephen Karle received a golden handshake of more than half a million pounds plus a bonus after his sudden departure.

West Bromwich Building Society investors consider legal action over change of benefits - Telegraph report.

Building Societies Association
May 2009 - "Careless Talk Costs Lives".
The outgoing chair of the BSA, John Goodfellow, told the industry's annual conference - "We're a small village and we talk, but talk can be damaging".  He warned societies not to comment on the profitability of their peers in the current climate, given general anxiety over the stability of the sector and cited West Bromwich as an example where they had to deny rumours of financial troubles.

John Goodfellow also went on to say - "We need to reduce even further reliance on the wholesale markets – while still recognizing the benefits of a diversified funding base".  Strange that until the collapse of Northern Rock the building societies industry was pressing Government to introduce legislation to permit societies to increase the proportion of funding that could be obtained from wholesale sources i.e. the Butterfill Bill.  See below.

The next chairman of the BSA is Graham Beale, Chief Executive of Nationwide Building Society.

Britannia BS and the Co-op
January 2009 - Following the introduction of new legislation (the Butterfill Bill) and the downgrading of Britannia BS it has now been confirmed that Britannia and Co-operative Financial Services (includes Co-operative Bank, Smile and Co-operative Insurance) are to merge.  Britannia will become a subsidiary of the Co-operative group.

Our Comment - The announcement states - ”Customers will continue to share profits and have a say in running the business” (must be referring to the Co-op)!  It has been decided who is getting the new jobs and who is leaving (and how much money they will all receive).  At least, unlike other recent emergency mergers, this one is expected to be subject to a members’ vote.

BSA Calls on Society Members!
January 2009 - The BSA is actually suggesting that members of building societies should write to Alistair Darling and complain about the fact that societies are required to compensate failing banks through the Financial Services Compensation Scheme.  See Channel 4 Report

Our Comment - It sounds like a nice piece of PR.  Perhaps they should have thought about this situation before the small print in the scheme was agreed.  Perhaps the BSA should suggest that society members should write to their societies and complain about boardroom members who failed to protect society members funds.

Newcastle Building Society Announces Staff Cuts
January 2009 - Following on from the branch closures announced in December the Newcastle BS has announced that 150 staff are to lose their jobs.
See BBC News Report.

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Beverley Building Society Closure
December 2008 - This society is closing one of its two offices.  The reason given for this is the unexpected costs incurred through their contribution to the compensation fund for Bradford & Bingley bank.  See Hull & East Riding Report

West Bromwich Building Society Redundancies
December 2008 - 150 staff redundancies have been announced at this society.  This follows the arrival of Robert Sharpe (ex Portman CEO) as CEO and downgrading by Fitch the grading agency.  See Thisismoney Report

Our Comment - Does this mean a pay cut for Mr Sharpe or were these cuts needed to pay his bonus?

Newcastle Building Society Announces Capital Issue
December 2008 - Newcastle Building Society announced that it has boosted its capital through the issue of £10m of Permanent Interest Bearing Shares (PIBS). The issue was made due to expected write-offs resulting from its exposure to Icelandic banks.  Newcastle BS is also closing some of its branch offices.

Treasury Discussion Forum
December 2008 - The Government's Pre-Budget Report announced the establishment of a discussion forum, chaired by the Economic Secretary to the Treasury, to look at how banks and other financial institutions can work better in the interests of consumers and society as a whole.

Banking Code
December 2008 -The government is to put the banking code on a statutory footing.  The FSA is currently consulting on proposals for a new framework to regulate the way that banks treat their customers and is seeking responses from customers of banks and building societies.

Click here - Regulating Retail Banking Code of Business Consultation.  The deadline for responses is 16th February.

The legislation will strengthen the framework for protecting bank depositors and enhance financial stability through measures to reduce the likelihood of banks getting into difficulties.

The reforms of the banking system originate from the Treasury’s consultations on financial stability and depositor protection and recommendations made by the House of Commons Treasury Committee’s report on banking reform.  The changes are likely to be embodied in the Banking Reform Bill, which will also provide the Bank of England, Treasury and Financial Services Authority with new powers to intervene in a banking crisis.

The Daily Mail reports: "The current voluntary code is seen as toothless.  Marc Gander, founder of campaigning website consumeractiongroupco.uk, which has 200,000 registered members, most of whom are bank complainants, states the code is a sham.  The idea of banks (and building societies) being fit to regulate themselves is laughable".

Building Societies Fail to Pass on Base Rate Reduction
December 2008 - The World News reports - "Only four building societies have passed on the Bank of England's surprise base rate cut to borrowers on variable rates.  Click Here - World News Article

Chelsea
October 2008 - Chelsea BS has been downgraded from C+ to C by Moody's Investor Service because of asset value problems including high levels of exposure to non-standard mortgages.  This was followed by the society's announcement that it has £55m invested in Icelandic banks.  However ratings agency Fitch has not made no change so far.  

The Treasury has launched a consultation on the amendments and this is open from 1 September to 27 October 2008.  The consultation can be accessed via the Treasury website at www.hm-treasury.gov.uk/consult_building_societies.htm. Paper copies can be obtained from the HM Treasury Correspondence and Enquiry Unit by e-mail to ceu.enquiries@hm-treasury.gov.uk or by telephone on 020 7270 4558.

Cheshire and Derbyshire
September 2008 - It is very sad but it comes as no surprise that these two societies are to be gobbled up by the Nationwide.  The Derbyshire BS annual report showed that the society needed to take drastic action.  Approaches were made to the Cheshire BS in 2006 by the Portman BS when the Cheshire was experiencing troubles.  These were rebuffed and the CEO of the Cheshire stated that the Cheshire intended to remain independent.  Now it will in any case join with the Portman at the Nationwide BS.

These societies may have been too dependent on funding from wholesale financial markets and high risk mortgages.  However the FSA has stepped in and is using its powers to effect the transfer of assets.  It is reported that no members will receive windfalls nor will they be allowed to vote on the subject.

These events demonstrate the parlous state of the industry.  When two societies of this size need to take shelter under the Nationwide's wing and there are obvious concerns about the rest of the societies.  The FSA has already warned building societies to consider how they would survive a prolonged credit squeeze.  It said they were accumulating too much risk in buy-to-let mortgages and not preparing for "extreme stress scenarios.

Click here for FSA report on the merger process

Nationwide Voting Time
July 2008 - Nationwide BS even advertise the "Quick Vote" (which is a "Yes" vote for them) on the envelope!  What will they do next?  If only they could fill the forms in for you.

A big red arrow on the ballot paper shows members where to give away their vote to the fat cats.  

They offer you the chance to win £1,000 if you vote.  So vote "Against".

They say your vote "does makes a difference".  Really?  The only difference it will ever make is if you vote "Against".

Their "Voting Guide" states "Strength in Numbers - Your Vote Keeps us Strong".  This is very true - the "Summary Financial Statement (SFS) shows that the fat cats are even stronger - a massive 41% stronger for the execs.  The chief executive receives far more as bonuses than his basic pay - 174%more!  The non-execs pay figures are 19% stronger (includes their new recruits resulting from the Portman merger) and an increase of no less than 274% for the new chairman from £50,000 to £187,000 (a part-time job)!  That is definitely "Strength in Numbers".

The SFS states "... it is essential that we reward our top management fairly and in line with the market".  That is the kind of fairness that we would like to see for members.  It is not a bank (at least in law) so the directors are not accountable to any shareholders and do not have the pressures of directors of banks but like to reward themselves in line with directors of banks.

Under the heading "Reward principles and decisions on pay" the SFS states "The rationale for setting salary/performance pay levels must be clear to our members" but needless to say does not spell out exactly how such pay levels and such massive pay increases have been justified.

The SFS states "As a mutual organisation, Nationwide is run for the benefit of its members".  Really?

Nationwide Voting Time
June 2008 - It will soon be "voting" time for the Nationwide BS.

Most members will be waiting with baited breath to learn how much more the directors paid themselves last year particularly following the takeover of Portman BS.

Unfortunately Alan Debenham, who has received a considerable proportion of the votes in previous elections, has decided not to stand as a candidate so the procedure will simply be a formality to conform to legal requirements.  The directors will, no doubt, provide the usual undemocratic "quick vote" option that allows you to give all your votes to the chairman for the benefit of the directors.

If you have any queries you can contact Alan Debenham at alandebenham@hotmail.com.

Catholic and Chelsea
June 2008 - The Catholic BS (UK's second smallest building society with just one office) has announced that it is to be taken over by the Chelsea BS.  This society has had a rather rapid turnover of chief executives in recent times but the current one will be the last and his action will solve the society's problems.  Click here to see full announcement.

Review of Executive Pay
May 2008 - Following a demand from fund managers the Association of British Insurers is to carry out a review of bank executive pay structures.  The Association states that their guidelines have always made it clear that bonuses should be aligned with shareholder returns.  Unfortunately building society executives and non-executives are a law unto themselves and are not affected by this review.  So members should not expect any change to the vast difference between boardroom pay and member benefits.

Skipton
April 2008 - Skipton BS continues to expand its empire with the purchase of Medical Care Direct, the Essex-based provider of self-pay hospital services.  This will expand its Private Health Partnership division.

Banking Code
March 2008 - The latest edition of the Banking Code is now available.  Make sure you ask for a copy from your building society.

Bank of England
January 2008 - Responsibility for collecting building societies’ statistical data has been transferred from the FSA to the Bank of England.  This brings the statistical reporting of building societies  in line with that of banks.

Banking Code
January 2008 - Many savers will have noticed the marked increase in the number of societies offering savings products with high introductory interest rates in the form of time limited bonuses after which the interest rate falls to a mediocre level without any further warning from the societies.  Scarborough BS is just one such society that is renowned for accounts with introductory bonuses.  In a press report the Nationwide BS management (the "consumers' champion") has called for a voluntary code of practice for fair play for consumers on savings products.

This appears to indicate that even the management of Nationwide BS, like consumers, has little faith in the Banking Code to which the Nationwide BS subscribes.  The industry, has rejected the recommendation of the Banking Code Independent Reviewer that would address this problem.

The high introductory bonuses technique that societies use is not the only scheme that has recently seen an increase in popularity amongst building societies management.

The next edition of the Banking Code is due for distribution in March 2008.

Kent Reliance Fat Cats
January 2008 - The Kent Reliance BS reports that its Chief Executive received a pay rise of 35% last year with the rest of the executives gaining 38% over the previous year.  The society states that it provides details of how boardroom bonuses are earned except that it does not.

The society provides members with the opportunity to vote against the pay increases but it is not binding and most members do not seem to mind such greed.  It is a pity that members do not see such increases in savings interest rates.

Moneysavingexpert

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Bumper Bonuses at Building Societies
December 2007 - Christmas will have come early for building society directors this year.  Following the collapse of Northern Rock people have been making record deposits in building societies.  Directors will be taking bonuses home by the truck load without having to do anything special to earn them.  Watch out for a National Lottery type bonus for the chief executive of Nationwide BS where profits have also benefited from the takeover of the Portman BS.

Nationwide ISAs
September 2007 - Nationwide BS has continued to have administration problems, particularly with ISA accounts, that have been compounded by the takeover of Portman BS.

Click here for Thisismoney report.

Portman & Nationwide
August 2007 - The FSA Decision Document for the takeover of the Portman BS by the Nationwise BS is available on line and makes interesting reading.
Click here to view full document.

Poor Savings Accounts
July 2007 - Research carried out by Investec Private Bank in conjunction with Moneyfacts shows the extent to which building societies and banks are failing to increase their interest rates on savings accounts in line with the official cost of borrowing.

In 2002 nine out of eleven "best buy" savings accounts were paying more than the Bank of England base rate at 4% and the other two matched it.

In 2007 only three of the "best buy" savings accounts matched or bettered the 1.25 point rise in the base rate since 2002 and six had increased their rates by less than 1 percentage point.  The average increase for all accounts was only 0.92 points.  This is despite a Banking Code that societies are supposed to conform with to treat members fairly.

Nationwide - "Mutuality is Alright for Some"
June 2007 - Paul Farrow reports in the Daily Telegraph on the large pay packages that Nationwide BS directors have awarded themselves despite poor performance and the slowness in responding to the security lapse resulting in a £980,000 fine by the FSA.

Click here for Telegraph report

Fat Cats First and Members Last at Nationwide
June 2007 - The Nationwide BS AGM is due to be held in Birmingham once again next month.  The number of members attending the last AGM was about 25% of the number that attend AGMs held in London and members were almost outnumbered by staff.

The FSA fined the Nationwide BS almost £1,000,000 for lack of security and delay in taking action to protect members.  Needless to say there is no mention of this in the AGM notifications sent out to all members.  Nevertheless the directors have awarded themselves another record round of fat cat bonuses and leaving packages while members have had to bear the cost of the fine. 

Former Chief Executive Philip Williamson departed with a staggering £3.2m of members money - a 100% increase on the previous year.

Total Boardroom pay rose from £4.4m in 2005 to £8.6m in 2006!

Click here for Thiismoney comments

Portman AGM
April 2007 - 93% of Portman BS members voted in favour of windfall payments for a Nationwide BS takeover which will result in branch closures and job losses.  Things are different for Robert Sharpe the Chief Executive.  He is to receive a fat cat pay and pension package for his efforts but none of this has been revealed to members.

Our Comment - No surprises there at all.  Click here for Thisimoney report.

Fat Cat Pay Rises
April 2007 - The Financial Mail reports on the double digit pay increases and large pension pots that building society directors have awarded themselves.  John Whayman of Ipswich BS and Martin Ritchley of Coventry BS (motto TLC not PLC) departing with pensions that most of their members could only dream about.  The report speaks of some members who have written to their societies to complain but have effectively been told tough.  Like all good mutuals the directors put members first Click here for full report.

Our Comment - The Nationwide will be the one to watch to see just how the bonuses will suffer (not) following the costs that members have had to bear for Nationwide's security lapses - see below. 

Portman & Nationwide
March 2007 - In the Portman BS "Merger Booklet" for members the chairman, Tudor John, states "If building societies are to continue to compete successfully with the retail banks, the Board believes they need to enjoy comparable economies of scale and offer attractive and competitive product pricing and services to members".

Our Comment - This statement means that Tudor John sees no future for the industry in particular the small societies unless all societies combine.  However the directors will be doing quite well out of the takeover.

A spokesman for Portman management commenting on the small "windfall" said: "The handouts are about compensating Portman members for the transfer to Nationwide"  Presumably this was not Tudor John as he claimed that joining the Nationwide would bring benefits of membership.

Go to www.portmanprotest.com

Click here for newspaper comments

Click here for Thiismoney comments

Click here for Moneybag comments

Portman & Nationwide
March 2007 - It is reported that the planned takeover of Portman BS by Nationwide BS will result in the closure of 88 branch offices making 500 hundred employees redundant.  All this for a paltry financial bribe for Portman members.

Our Comment - Nationwide is already the largest building society yet its performance is often inferior to smaller societies.  Making it bigger would not seem to be the answer to its problems.

Nationwide
March 2007 - The Nationwide BS is reported to have made a U-turn on its bullying tactics against members following investigations by the Financial Ombudsman Service.  See Guardian report - "Nationwide Backs Down on Account Closures"

Nationwide
March 2007 - Tne Nationwide BS is accused of using bullying tactics against members who have successfully claimed back excessive charges.
See Guardian report - "Moan and We'll Close You Down"

Our Comment - Current Nationwide slogan - "the building society that is "Proud to be Different".  Perhaps this should be "The building society that is actually a bank".

Ipswich
March 2007 - Ipswich directors pay increased by 62% last year from £294,000 to £471,000.  Pay for the chief executive includes a pension contribution of £149,000.  The chief executive retires at the end of the month.

Our Comment - Slightly inflation busting but the members of this society were feeling generous.

Nationwide
February 2007 - Graham Beale is to take over as chief executive of the Nationwide BS in April.  Mr Beale likes the fact that he has no shareholder pressure to worry him but he states that he is in favour of charging for current accounts if banks lead the way!

Our Comment - The current Nationwide slogan is "the building society that likes to be different".  Meanwhile Barclays Bank has vowed to keep free banking on current accounts.  We are concerned about just how different Mr Beale wants Nationwide to be.

Nationwide
February 2007 - The FSA has fined the Nationwide BS £980,000 for lack of security following the loss of a laptop computer containing personal and confidential information on its members and for its slowness in taking action following the loss.  However Nationwide management maintains that the lost information does not pose a threat to members  but refuses to say what information they lost.  The FSA provided a 10% discount for prompt payment of the fine.  The society subsequently sent leaflets to its members advising them on security measures!

Philip Williamson the Nationwide Chief Executive said "No customer (note: not member) has lost any money as a result of this incident but we wish to apologise for it".

Our Comment -  So where is the money coming from if members do not lose out?  You can bet your savings account balance that Mr Williamson and the other directors will not be paying the fine and they will still receive the customary bonuses for "good performance".

View what others have to say and full reports and readers' comments:

Thiismoney

Financial Services Authority (FSA)

BBC Report

The Register

ZD Net

Daily Telegraph

VNU Net

World Services Group

BNMA Inc

Portman Protesters 
January 2007 - Members and staff of the Portman BS are not at all happy that Robert Sharpe (Portman Chief Exec.), who is due to retire with a nice fat golden handshake, wishes to encourage people to vote in favour of the Nationwide BS swallowing up the Portman BS.  Nationwide is not exactly renowned as an outstanding performer.  Go to www.portmanprotest.com.

Among the reasons given by Robert Sharpe why Portman members should agree to his proposed takeover by Nationwide is that Portman members will:

    become members of the largest building society in the UK
    gain access to a greatly enhanced branch network
    gain access to a wider range of products and services

Our Comment - What a Sharp chap he is - did he not know that people can be members of more than one building society?

Merger Mania?
January 2007 - Richard Dyson in the Mail on Sunday speculates on building societies that may be in decline and considering possible mergers.  Click here for full report.

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Proud to be Indifferent?
December 2006 - The Nationwide BS has attracted widespread criticism over  a series of TV ads it has been running to attract new business.  These are supposed to demonstrate that it does not differentiate between existing and new members on cheap mortgage deals because it is a mutual society.  However those members remortgaging do not get the same deal.

Yorkshire
October 2006 - The Yorkshire BS is to buy the savings business from the US bank MBNA.  This follows the purchase of Abbey's Sharesave scheme last June.  This will ensure the Yorkshire's position as Britain's third largest building society.

Nationwide & Portman
September 2006 - Arrangements have been made for the Nationwide BS to take over the Portman BS next year with windfalls to encourage Portman members to vote and support the plan.  There will be no votes or windfalls for Nationwide members.  Meanwhile the Portman is set to take over the Lambeth BS this year.  Both societies rarely appear among the top performers for interest rates on savings accounts and Nationwide has not passed on the full increase to savers following the latest bank base rate increase.   Hopefully this will enable the Nationwide to compete with banks in offering better terms and facilities for its members than it does at the moment.

Saffron Walden, Herts & Essex
September 2006 - There has been no news following the announcement by SWHEBS that it would change the name to Saffron BS in September.

Kent Reliance
September 2006 - Kent Reliance BS is offering lifetime mortgages to help people to minimise their inheritance tax burden.  Click here for Sunday Telegraph report on "The Danger of Deathbed Mortgages".

Britannia
September 2006 - The Britannia BS is offering savings accounts linked with a number of football clubs including Chelsea, Manchester United and Arsenal.  If you wish to help out any poor footballers these accounts offer 2.3% on £100 to you and up to 1% to the club.

Nationwide
July 2006 - The directors have provided a very undemocratic bright red "quick vote" option that allows you to give all your votes to the chairman for the benefit of the directors.  They are also offering some of your money to a charity, chosen by them, in exchange for your votes.

Nationwide's AGM is being held once again at the International Convention Centre in Birmingham.  So numbers of attending members will be low and costs will be high.  In their "Voting Guide" Jeff Prestridge of the Mail on Sunday advises that it is your society, you own it and you SHOULD have your say.  How much say did members have on the above?

High (paid) Society
June 2006 - Jeff Prestridge reports in the Mail on Sunday that while savings interest rates were being cut and cut again the directors kept their snouts in the trough.  Nationwide BS chief executive Philip Williamson received another massive pay increase last year at 9% taking his pay to £1,329,000.  However in percentage terms West Bromwich BS chief executive Andrew Messenger received the largest increase of all at 27%.

Universal & Newcastle
May 2006 - The Universal BS, a small Newcastle based building society has announced that it is to be taken over by the Newcastle BS with effect from the end of 2006.

Kent Reliance
May 2006 - KR BS has announced that it is dropping the mandatory charitable sign-away clause for new members.  This was originally introduced to prevent people disrupting business when a potential windfall situation occurred.

KR has been closing branches and with only two now in existence the Chief Executive Mike Lazenby has also announced that it plans to become the first internet-only building society and will change the name to the Internet Building Society. 

Newcastle
March 2006 - Jeff Prestridge in the Financial Mail reports that chief executive Robert Hollinshead had a pay increase of 14% despite the societies profits falling by 42% mainly resulting from the costs of closing 19 branches.  Click here for full report.

Survival Fight for Cheshire
March 2006 - The Mail on Sunday reports a £10m fraud at Cheshire BS has plunged the organisation into a crisis.  Click here for full report.  It is also reported that Cheshire BS rejected a takeover offer from the predatory Portman.

Windfalls or Shortfalls - the true cost of demutualisation
March 2006 - A report produced by the Association Of Chartered Certified Accountants for the All-Part Parliamentary Committee for Building Societies and Financial Mutuals states that demutualisations have been good for directors but bad for members (which highlights the lack of accountability in the industry).

The committee is reported to have received over £7,000 in 2005 from the BSA.

Click here for a link to the report.
Click here for Investors Association comment.
Click here for Times report on the business of lobbying.

Portman and Lambeth
March 2006 - Portman BS has announced that it is to take over Lambeth BS.
Click here for thisismoney report.  Click here for Investors Association forum discussion on this subject.

Voting
February 2006 - Beware it is election time again for many building societies.  Time for members moment of "democracy".  Time to vote for people who have already been appointed as directors.

Building Societies
February 2006 - The BSA is concerned about the continued disappearance of building societies and is seeking a change in the law governing societies.  Click here to see thiismoney report.

Nationwide
January 2006 - The Nationwide BS launched a higher paying current account and followed this up two days later by cutting the rates on other savings accounts.

Leeds & Mercantile
January 2006 - The Leeds BS (previously known as the Leeds & Holbeck BS) has announced that it is to "merge" with the Mercantile BS.

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Small Mutuals Fail the Value Test
November 2005 - The Mail on Sunday reports that small building societies are providing poorer value products to their members than big banks.  Click here for full report.

Nationwide
November 2005 - Nationwide BS profits increased by 14% for the half year despite a drop in its mortgage business where its share of the market dropped from 14% to 8%.  Profits came from personal loans, current accounts and credit cards.

Cheshire
October 2005 - Cheshire Building Society is to close 4 branches and reduce headquarters staff following the latest half-year results which show profits down to £5.1m from £7.2m for the corresponding period in 2004.  The sudden departure of Chief Executive Colin Whittle in May followed a 25% fall in profits over three years while Whittle was awarded a £100,000-plus pay increase in 2004, taking his overall package to £358,200 last year.  The last election saw 90% of voting members supporting Mr Whittle but the board members seem to have been among the remaining 10%.

Failing the Fairness Test
August 2005 - The Financial Mail has compiled a fairness test to expose building societies that do not treat all members fairly.  Click here for full report.

Newcastle
August 2005 - Newcastle BS is to close 19 of its 52 branches.  The Newcastle has 470,000 members and about 81,000 of them will no longer have a local branch but Robert Hollingshead the chief executive says the branches are little used and each one conducts an average of only 39 transactions per week.  The announcement follows an 11% fall in profits for the year to £12m.

Branch closures will take place at Ayr, Berwick, Bradford, Doncaster, Edinburgh, Falkirk, Huddersfield, Hull, Kendal, Leeds, Leicester, Manchester, Newton Stewart, Nottingham, Paisley, Peterborough, Preston, Sheffield and Workington.

Fat Cat Who Just Gets Fatter
August 2005 - The Mail on Sunday reports the breaching of corporate guidelines at Monmouthshire BS.  Former chief executive of the Monmouthshire BS is back on the board as a non-exec. after receiving a goodbye present of £66,000 and an £11,000 car and a pension pot estimated to be worth £2,000,000.  His new role is supposed to be independent.  His new job will include determining the pay for fellow members including his friend the chairman.

A Mockery of Mutuality
July 2005 - Mail on Sunday report on the increasingly inflated salaries and bonuses that building society directors are paying themselves.  Click here for full report.

Cases of Split Personalityy
July 2005 - Jeff Prestridge of the Mail on Sunday writes that building society directors want the best of both worlds. They want the public to believe there is no more customer-friendly organisation than a mutually owned building society yet they personally covet the huge rewards that their counterparts earn in the cut-throat world of the plc - even though they do not have dividend-hungry shareholders to contend with and have much longer executive shelf lives.

This split personality explains why last year, when many homeowners were rocked by interest-rate rises, the chief executives of the top 30 societies enjoyed average pay rises of 13%.  Click here for full report.

Nationwide
June 2005 - Chief Executive Philip Williamson had a 25% pay increase in the year 2004-05 bringing his fat-cat package up to £1.2m.  Meanwhile Nationwide's interest rates on savings accounts fail to achieve the levels of banks and smaller societies.

Our Comment - Nationwide directors continue to claim to put members first!   

Britannia and Remutualisation?
May 2005 - Britannia has purchased 97 Bristol & West branches as well as their deposit system from Bank of Ireland.  B&W was a building society before being bought by Bank of Ireland in 1997.  B&W's 850,000 savers will now become members.  The mortgage business will be retained by the bank.

Paul Myners
May 2005 - Paul Myners who failed to recommend any improvements to building societies standards of corporate governance is in the news again.  Apart from the rebellion against him at Marks & Spencers where he has changed his mind about just being an interim chairman and has decided to stay, the Chancellor has just appointed him to the Court of the Bank of England.

Private Eye says he has a unique qualification for this job as he was chairman of the fund management company Gartmore when it was involved in the split capital trust scandal.

New Banking Code - Old Tricks
March 2005 - Sylvia Morris reports in the Daily Mail that savers continue to lose out on old building society accounts under the latest edition of the Banking Code which came into effect this month.  This is the industry's own voluntary code of conduct towards members.  Click here to view the news item. 

The £8.3 million Chelsea Pensioner
March 2005 - Ex-Chelsea BS Chief Executive Michael Bage retired on 7th January 2005 with an unbelievable pension pot of £8.3 million.  The value of his pension is equal to a fifth of the society's profits!

Jeff Prestridge the Mail on Sunday Finance Editor urges members to vote against the Chelsea old pals resolutions.

Michael Bage's pension pot is described by the Financial Mail as: "the largest in the building society sector and one of the largest for any UK company chief".

Our Comment - You have got to read it to believe it!  We feel sure that Mr Bage would like to thank all members for their generosity.  No doubt this will be used in the annual game of leapfrog on board room pay.

Click here to view Mail on Sunday articles by Richard Dyson and Jeff Prestridge.

Hinckley & Rugby
February 2005 - One director standing for election again this year is a fulltime NHS manager!

Our Comment - Enough said - except to note that the voting paper has the "hidden" tick box in the small print.

Breaking the Code
January 2005 - Which? (ex Consumers Association) lists 11 banks and building societies that have broken the Banking Code during the period October 2003 and September 2004.

The Banking Code is the industry's own voluntary code.  Under the current version organisations are supposed to inform members when savings interest rates fall by more than 0.5%.  A new version due in March reduces the figure to 0.25% but some building societies have failed to notify members even at the present level.

Our Comment - The industry is supposed to be monitored by the Banking Code Standards Board!!

All Party Group
January 2005 - The All-Party Parliamentary Group for Building Societies & Financial Mutuals has published a report, via Mutuo, on a short inquiry carried out prior to the Myners Review.  Copies are available free from Matthew Ball e-mail m.ball@mutuo.co.uk or telephone 020 7367 4177.

Mutuals and their Communities
January 2005 - Mutuo has published what is basically a collection of quotations on mutual societies from various sources.  Copies are available free from Jonathan Blay e-mail j.blay@mutuo.co.uk or telephone 020 7367 4177.

Top Mortgage Lenders
January 2005 - The Moneyfacts 2004 survey of mortgage lenders shows Nationwide in 3rd position after HSBC and Egg.  The survey is based upon the total interest paid on a standard variable rate mortgage of £100,000 between 1st January and 31st December 2004. 

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Myners Review of Mutuals
December 2004 - Paul Myners, chairman of Marks & Spencers, former chairman of Gartmore, chairman of the Tate galleries and non-exec director of many other companies, has now published his report on corporate governance of life mutuals with a few words on building societies.

Our Comment - As was expected the corporate governance of building societies has been glossed over.  The report can be accessed on on HM Treasury website at www.hm-treasury.gov.uk/myners.

Kent Reliance
December 2004 - 7 of 11 branches sold off.  Buy to let mortgage portfolio purchased from Skipton.  Back office jobs exported to India but the society says it remains committed to local initiatives and charities!

Nationwide
November 2004 - Nationwide has announced the appointment of two new non-exec. directors Derek Ross and Geoffrey Howe.

Our Comment - Geoffrey Howe is ex-chairman of Railtrack - should members be pleased to have him?

Nationwide
November 2004 - Richard Handover the much criticised chairman and former chief executive of loss making WH Smith is to be replaced.  Mr Handover is also a non-executive director of Nationwide BS.

Our Comment - Enough said.

Savings Accounts - Bonuses
November 2004 - A survey by Investec Private Bank reports that almost 50% of the best paying savings accounts fall below 5% after 6 months or less due to introductory bonuses.  Building societies have long been criticised for using introductory bonuses to propel accounts into best buy tables.  The high rates attract savers but they have a very short lifespan and savers are left with poor paying rates once the bonus period has ended.

The survey also shows that 20% of savings accounts pay less than 3% on balances even though the base rate is at 4.75%.  The real rate of return is the amount left after deducting tax and inflation.  With the low rates on many savings accounts that can result in a negative figure.

BSA response to the Myners  Review
October 2004 - It is not often that we agree with the BSA, but there is one part of its response that we entirely agree with:

“A number of commentators have found that a central consideration of boards and senior operatives which opt for demutualisation is their own well-being. Typically salaries and fees in institutions that have demutualised are higher than in the predecessor organisation.  Share option packages paid in the plc sector are lucrative, and add to the personal incentive of directors and senior management to convert.”  

Unfortunately the BSA did not speak out like this about the directors of the Bradford and Bingley when they were proposing to convert.  The B&B continued as a member of the BSA until the day of conversion and its directors were welcome at BSA meetings.

Click here to view the BSA submission to the Myners Review.

BSMA response to the Myners  Review
October 2004 - Click here to view the BSMA submission to the Myners Review.

Portman Branch Closures
October 2004 - The Portman is to close three part-time branches.  Opening hours at another 16 branches are to change from part-time to full-time but will be closed completely if not profitable after 12 months.

Nationwide
October 2004 - At the end of September the Chief Executive of Jarvis, Kevin Hyde, resigned less than a year after taking over at the firm forever linked with the Potters Bar train crash. His resignation came as the company was warned of an impending shareholder revolt over bonuses paid to him and five former directors. 

Myners Review of Mutual Societies
July 2004 - The review on corporate governance announced by the government which is to include all mutual societies as well as life offices following the Penrose report on Equitable Life has been formally announced.  It is to be chaired by Paul Myners (chairman of Marks & Spencers, former chairman of Gartmore, chairman of the Tate galleries and non-exec director of many other companies).

Our Comment - We encourage all mutual society members to make a submission to the review body.  Details for response can be found on HM Treasury website at www.hm-treasury.gov.uk/myners (pdf file).

Nationwide AGM
July 2004 - The results of the Nationwide BS elections show that Alan Debenham received approximately 40% of voting members support.  This is an extremely good result achieved despite all the efforts of the board.  Not surprisingly Richard Handover (chairman of poor performing WH Smith's and director of Royal Mail) received the second lowest number of votes.

If you wish to view the webcam recording of the AGM please click here.

Nationwide - Another Fat Cat Year
June 2004 - Nationwide's annual summary financial statement reveals boardroom pay increases of up to 73%.  The chief executive's pay has now reached £1,000,000.  Another director retired with £1,440,000 from the till and even Richard Handover (chairman of poor performing W H Smiths) received a 23% pay increase.  The increases consisted mainly of bonuses which outstripped basic levels and pushed the cost of the boardroom to £4,000,000.

Our Comment - Didn't they do well?  Members are not allowed to know why such excessive payments were made by this "mutual society".

Fat Cat Pay Protests at the Darlington
May 2004 - The Investor's Association reports on the silencing of a member at the Darlington AGM when enquiring about Fat Cat pay increases for the board.  Dr Ian Ross, of Barnard Castle, Co Durham, says that Darlington Building Society is moving away from its roots as a body run for the benefit of its 86,000 members.  He alleges it is increasingly run for the benefit of the board directors.  Click Here to see the full report.

Societies are Still not Passing on Interest Rate Increases to Savers
May 2004 - A Daily Mail report reveals how many banks and building societies are not passing on the full amount of bank base rate increases to savers.  In particular Nationwide and Britannia.  Click Here to see the full report.

Myners Review of Mutual Societies
April 2004 - Following the Penrose report on Equitable Life the government has commissioned a review of mutual life insurers.  The review is to be chaired by Paul Myners (acting chairman of Marks & Spencers, former chairman of Gartmore and chairman-elect of the Tate galleries).  Paul Myners will also be reviewing the whole mutual industry.  Click here here for HM Treasury Press Release.

Moment of Truth
March 2004 - Click here to view Mail on Sunday report on proposed demutualisation of Standard Life.  The report suggests that members should vote against the re-election of the directors who have been responsible for the situation that Standard Life is in and against the fat cat pay increases that they have awarded themselves.

Fattest of the Fat Cats
March 2004 - Click here to view report in Mail on Sunday which reveals how corporate governance at mutuals has fallen well below standards of companies.  The report finds that directors of mutuals continue to award themselves "fat-cat packages that would no longer be on the table for top executives at quoted companies owned by shareholders".

Shoddy Deal for Savers
March 2004 - Click here to view Daily Mail report which shows that most building societies are failing to pass on the full increase in the bank rate to savers.

A Matter of Mutual Respect
February 2004 - Click here to view Mail on Sunday on poor corporate governance standards, lack of accountability and pay increases for directors of mutual societies.

More Nation wide boys
February 2004 - Another member has a tough time with Nationwide through mis-selling of high risk products according to another article in the Guardian.  Amanda Leak is to receive £10,000 but only after the intervention of the Ombudsman and following yet another challenge by the Nationwide against the Ombudsman's primary adjudication.

Nation wide boys
January 2004 - "Nation wide boys" is the title of an article in the Money section of the Guardian on 17th May 2003 about a pensioner's fight with the Nationwide BS over inappropriate financial advice.  The report states that in 2000 a 70 year old pensioner Ann Bilsby wanted to place £30,000 in a safe account for income to boost her pension but Nationwide advised her to invest in its Nationwide Growth Trust, a risky mix of equities, with a growth fund of only 1%.  The plan is said to have included a capital withdrawal plan which resulted in her losing 50% of her savings within two years and being charged a fee for paying her back her own capital.

The Guardian was backed by the comedian Mark Thomas in a "Justice for Ann" campaign which prompted readers of the Guardian to write and complain to the chief executive Phillip Williamson.  Still the Nationwide BS would not budge.

The Guardian now reports that after a nine month campaign and a year of worry to the pensioner the  Financial Ombudsman Service found in favour of Mrs Bilsby and eventually Nationwide grudgingly agreed to refund her £15,000 plus interest but would still not admit liability. 

Mrs Bilsby had been a loyal member of the building society "that likes to be different" for 40 years but they could not even say sorry.  Mrs Bilsby has now decided that the claim "it pays to decide Nationwide" is not necessarily true (unless you are a director).

The Guardian also reports another similar case of poor advice for a member of 14 years where the Nationwide is fighting the Ombudsman's recommendation.

Our Comment - So much for loyalty from members.  Is it not time for some loyalty to members?  See the "Cost of Loyalty" below.  Another Nationwide claim is "Members not shareholders are our focus so you can trust us to be open, honest and fair"!

Nationwide
January 2004 - Richard Handover a non-executive director at Nationwide continues to receive adverse publicity in the press over the declining fortunes of shareholders in W H Smith compared with the increasing fortunes of Mr Handover and the new chief executive.

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"Mutuality the way Ahead"
December 2003 - Click here for speech by Steve Huxham spokesman for the Investors' Association at conference on mutuality arranged by the BSA and Mutuo entitled "Mutuality the way Ahead".

Is Your ISA a Rip Off?
December 2003 - Click here to view Daily Mail report which states "Savers are being ripped off by poor-paying tax-free cash mini ISAs, with the worst paying around a third less than the best".  The best is Cheshire BS 1st & 2nd Issue (closed account).  The worst is Northern Rock Instant Access.

Nationwide
December 2003 - Richard Handover a non-executive director has been in the news again.  He was co-opted to the board in May 2000 but did not appear for election until July 2001.  He was described by the chairman as the kind of executive that is needed for an £85 billion business and members were told that his advice could save the society millions of pounds.

Mr Handover has been chief executive of WH Smith since 1997 and in breach of corporate governance standards for best practice is now chairman of that company.  Following the continuing decline in share price WH Smith was described by one city analyst as "a business which seems to permanently disappoint"  The Daily Telegraph City Comment states "his reign has been marked with disappointments and gaffes though his own pay packet has expanded nicely throughout".

The Sunday Telegraph reports that there are now concerns that the company’s IT and distribution systems are having problems and that the company had “forgotten” that it owned a building and a multi-million pound provision was needed to sort out the matter.  The report’s forecast for the company is dismal and as competition increases this might lead to a bleak Christmas for the shareholders of WH Smith but not for Mr Handover.  “WH Smith has been one of the worst performing retail stocks this year, with shares falling by almost 12 per cent since the start of the year, compared with a 24 per cent rise in share prices across the sector”.

Our Comment - It is difficult to share the Nationwide chairman’s opinions of Mr Handover.  See also Nationwide below.

The Cost of Loyalty
December 2003 - Click here to view Mail on Sunday report which says banks and building societies have "grabbed up to £600 extra profits per borrower by holding back rate cuts to homeowners on standard variable mortgages over three years".

Portman
November 2003 - Portman BS has threatened to sue Mutual Members founder TimTanner  The threat is described as 'brutally heavy handed' by Financial Mail lawyers and centres on Portman's chief executive - 54 year-old Robert Sharpe and allegations surrounding his affair with 27-year-old blonde Cheryl Binnis, a graduate employee who has achieved rapid promotion at Portman.

Click here to view Mail on Sunday report on this subject.

The relationship was revealed following an anonymous letter to the BSMA.  See Portman below.

Click here to see Mail on Sunday report in January 2003.

More Tricks of the Trade
November 2003 - Click here for another Daily Mail report on methods being used by banks and building societies to make savings accounts look more attractive than they are.  The article highlights the poor returns on notice accounts.  See also "Tricks of the Trade" below.  

Mortgages
October 2003 - BBC 2 Money Programme reports that average house prices are six times average incomes and well above expert forecasts.  The increase in the cost of houses is being fuelled by mortgage lenders who are encouraging people to lie about their incomes through self-certification in order that they can obtain larger mortgages.  The result is a vicious circle and prices continue to rise.  For such a major impact on house prices this illegal practice must be extensive throughout the industry.

Notice Accounts v. Instant Accounts
October 2003 - Click here for Daily Mail article showing that savings rates on the overwhelming majority of notice accounts are inferior to those paid on instant access accounts.

Tricks of the Trade
October 2003 - Click here for Daily Mail article on methods being used by banks and building societies to make savings accounts look more attractive than they are.  See also "Savings Rates - Dodgy Tricks" below.

Staffordshire
September 2003 - Members vote overwhelmingly for takeover by Portman.  Click here for Investors' Association comments.

Clay Cross
September 2003 - Members vote overwhelmingly for takeover by Derbyshire.

Skipton
September 2003 - After three years the directors have at last conceded defeat on the issue of compensation for members who held TESSA accounts.  This follows the Ombudsman’s decision that Skipton was not justified in paying better interest rates on ISA accounts than on TESSA accounts.  However, the directors are not going to give in easily and will only compensate those members who complain.

Our Comment - If you held or hold a TESSA account with Skipton be sure to check with the Ombudsman to see if you qualify

Harpenden
August 2003 - This small society has ceased to subscribe to the Banking Code (the industry's voluntary code of good conduct).  Note: Century and Penrith also do not subscribe.

Portman & Staffordshire
August 2003 - The payout to Staffordshire members to persuade them to support the takeover by Portman is reported to have been increased to an average of £350 rather than the £100 originally suggested by the societies.

Savings Rates - Dodgy Tricks
August 2003 - The Daily Telegraph reports that savings rates are at their lowest levels since 1874 and societies are using "dodgy tricks" on savers to make rates look better than they are.  An example used is Scarborough where a new "best buy" account is at 4% gross but drops to 3.4% after 6 months and to 0.2% if more than 3 withdrawals are made in 1 year.

To keep pace with the Retail Price Index higher rate taxpayers need a gross return of 5.2% and basic rate taxpayers need to earn 4%.

Fat Cats
July 2003 - The Guardian reports that average boardroom pay continues to increase at an ever greater rate.  The average in 2002 was 23%.

Our Comment - That was not enough to satisfy the greed at Nationwide where the increase was 58%.  Nevertheless that received the blessing of voters who were rewarded with yet another cut in savings rates and which are now at an all time low.

Nationwide
July 2003 - Alan Debenham and Tim Tanner increased their share of the votes to nearly 40%.  Click here to view the webcast recording of the AGM through the Nationwide web site.

Moneyfacts
July 2003 - Moneyfacts Magazine's  6 monthly survey of 44 mortgage lenders (banks and building societies) based on total interest paid on a £100,000 standard variable rate mortgage gives top spot to Egg followed by HSBC.  Nationwide BS comes third and Abbey National last.  The difference between first and last position is £1254.

Manchester
July 2003 - Manchester BS has bought the customer base of First Advice the financial services arm of The Accident Group's parent company, the Amulet Group.

Nationwide
June 2003 - The Fat Cats are at it again - the chief executive's pay has increased by 58% over the previous year to £838,000 

The finance director of this mutual society that does not perform particularly well for its members decided to leave in April and received a present of £890,000 giving him a grand total for the year of £1,435,000.

Interest rates for savers have been regularly reduced to levels well below those of banks in the same period even though there has been no reduction in the bank base rate.  Some accounts pay only 0.5% gross.

Our Comment - The directors' claim to be "Putting Members First"!!

Please be sure to vote against the pay rises.

Derbyshire and Clay Cross
June 2003 - The Derbyshire BS is to take over the Clay Cross BS.  Clay Cross is currently 63rd on the scale out of 65 societies.  This will reduce the total societies left at end of 2003 to 63.  Derbyshire is expected to close its Clay Cross branch.

West Bromwich
June 2003 - If you are a member of this society you will find that the chairman is offering to do all the voting for you.  They are offering a "Quick Vote" to save you all the strain of putting crosses on the form.  You will not even have to place a cross in the box that they have hidden in the small print on the back of the form.  The directors are so thoughtful.  

Portman & Staffordshire
June 2003 - The Portman BS is to take over the Staffordshire BS.  Staffordshire chief executive Bill Snaith and chairman Robert Yates are to join the Portman Board increasing the number of board members to twelve.  This reduces the number of building societies to 64.

Our Comment - Qualifying members of the Staffordshire are expected to receive a small sweetener of £100 to lubricate the path to the takeover so that another society will disappear by mutual consent.

Despite the claims of the Portman's board to be committed to their branch operations they still continue to close branches

Murray Financial
June 2003 - Ken Murray the man who founded the business to buy building societies and tried to takeover the Leek BS has resigned and is involved in a boardroom row over a pay off of £800,000.

Equitable Life
May 2003 - All of the non-executive directors of this struggling mutual society received a fat cat pay increase of 50% last year!

Our Comment - The society is only just about solvent and members have had to take a number of severe cuts to their pension funds to keep the society afloat.  But the directors believe in raiding the till not sharing the pain.

The Good, the Bad and the Ugly
May 2003 -Article in  thisismoney (7 May) on interest rates of mutuals v. banks

BSA
May 2003 - The Director-General of the Building Societies Association says "There is now no doubt that mutual institutions do genuinely want to listen to their members - and act on what they hear"!

Our Comment - Really?

Portman
May 2003 - Following an anonymous letter to the BSMA questions were asked at the AGM by Tim Tanner concerning an affair between 54 year old Robert Sharpe the Chief Executive and 27 year old manager Cheryl Binnis.  The letter states that her rise up the managerial ladder has been quite spectacular compared with other personnel who have taken up to twenty years to reach similar positions.  It was claimed that she was inappropriately involved in boardroom meetings to the annoyance and discomfort of fellow directors.

The chairman confirmed that he was aware of these activities but refused to discuss the subject with members and cut off Tim's microphone as they do at "mutual" societies.

The story was given full page three publicity in the Daily Mail on Saturday 3rd May.

Tim obtained a very good result of around one third of all voting members' support from the elections and this despite all the chairman's proxy votes that are shared out among the directors.

Robert Sharpe has come under fire for his fat cat salary increases and faced calls for his resignation following branch closures.

Fat Cat Pay Increases
April 2003 - Listed companies including banks now face shareholder scrutiny over boardroom pay increases but building society directors deny members the same rights and continue to award themselves massive pay rises and pension benefits.

Derbyshire's Peter Richardson received a 16% increase to £275,000 and Skipton's John Goodfellow received a 12.3% increase to £428,000.  Neither of these societies performs well for savers.

All but 3 of the 65 building society boardrooms paid themselves increases averaging 7% and twice the rate of inflation.

How do these increases compare with performance?  A Moneyfacts report in October last year showed the average savings accounts paid a staggering 0.49% gross and rates have tumbled since then.

Financial Services Ombudsman
April 2003 - Directors of banks and building society have been lobbying, through their trade organisations BBA and BSA for tighter controls to weaken the powers of the independent ombudsman service.  This came about through some decisions made by the ombudsman, which attracted considerable adverse media attention for societies.

Britannia
April 2003 - This major society has at long last started calculating mortgage repayments on a daily rather than a yearly basis.

Portman
March 2003 - The AGM Notice contains the "Board's Response" to Tim Tanner's election address.  Needless to say the response contains a number of questionable statements and is typically unmutual in ensuring that Tim Tanner is unable to respond and correct misleading statements.

However, Tim has been successful already through making the board remove the hidden opt out tick box from the reverse side of the voting form and place it on the front.  Even so this box is not for the benefit of members.

You can find Tim's response to John Roques' response by clicking HERE.

Tim also tells members of all societies they must make their voices heard.  Act now, take the trouble, make the time, it costs nothing - click HERE.

Nationwide
February 2003 - Nationwide plans to install a new security system described as a biometric signature verification system.  It is intended to provide a more secure method of signature verification than the current visual method.  Nationwide hopes that the new system will not only provide greater security but also reduce the amount of paper used and improve efficiency within its filing and retrieval methods.

Nationwide has previously been involved in experiments with an iris recognition security system but there has been no further news on this.  The cost of the experiments was never reported to members.  The report states that the new system has been tried and tested and is being installed in phases but again there is no mention of cost.

Best Buy Accounts
February 2003 - A survey carried out by the internet bank Egg, on the 141 bank and building society savings accounts that have appeared in "best buy" tables over the last 5 years, shows that 53 remained in the tables for less than one month and 74 for two months or less.  The average life of a "best buy" account is put at 4.2 months.

Short term "bonuses" are a common method used to gain entry into best buy tables following which the interest rate drops dramatically.

Our Comment - Beware of claims made by societies on the number of times their accounts have appeared as "best buys".

Portman
January 2003 - All of the resolutions for improved accountability and governance submitted to the board by Mutual Members have been rejected as illegal and without any explanation.

Our Comment - This is yet another demonstration of the industry's opposition to members rights and another nail in the coffin of mutuality.  Please click here to see the resolutions that were rejected and see the Portman voting form for last year.

Mortgage Indemnity Guarantees
January 2003 - A report by Savills Private Finance, one of the industry’s largest mortgage brokers, condemns the continued practice by the majority of building societies to use Mortgage Indemnity Guarantees (MIGs).  These are insurance policies that are paid for by borrowers but only protect lenders.  MIGs are described by Savills as ‘an unnecessary evil in this day and age’.

MIGs hit those who can least afford this insurance such as first time buyers who have to struggle to raise a 5% or 10% deposit. Savills’ ‘name and shame report’ shows that some lenders such as Lambeth BS impose a MIG even when a borrower has a deposit of 25%.  Many borrowers fail to appreciate that a market-leading headline rate with a MIG may be less competitively priced than a product with a higher headline rate without a MIG.

Nationwide
January 2003 - Richard Handover, chief executive of W H Smith, non-executive director of the loss making Post Office and non-executive director of Nationwide, which lost £40,000,000 on bad investments last year, is to become one of the highest paid postmen for a week.  It is reported that all directors of the Post Office will in future have to spend a week on the shop floor and delivering mail to learn the business.

January 2003 - The Higgs inquiry report (pdf file) on the role of non-executive directors states that almost half of the non-executive directors surveyed were recruited through personal contacts or friendships.  Only 4% had a formal interview and only 1% obtained their job through answering an advertisement.

Recommendations include - boards should be more open minded on recruiting and should not insist on previous board experience.  Non-executive directors should be truly independent, should have complimentary skills, should make a greater commitment to their work and should receive ongoing training.  The report also calls for a senior non-executive through whom shareholders would have a direct channel of communication.

TESSAs
January 2003 - Moneyfacts Magazine's annual survey on TESSA savings accounts of 87 banks and building societies shows that Leek United BS gave the best return followed by Earl Shilton BS and Holmesdale BS.  Nationwide BS the largest building society only managed 37th place.  At the bottom was Manchester BS.

Low Interest Rates
January 2003 - The Consumers Association estimates savers are losing £5bn in interest by leaving their money in low paying accounts.  According to the CA the worst building society interest rates on £1 are:

Chesham BS (30 Day) 0.1%
Dudley BS (instant access) 0.1%
Leek United BS (instant access) 0.1%
Loughborough BS (instant access) 0.1%
Newcastle BS (instant) 0.05%

Staffordshire
January 2003 - A former director, Andrew Thompson, has been charged with fraud and theft from the society.

Scarborough
January 2003 - A former director, Gerald Waterworth, was sentenced to 18 months in jail this month for theft from the society and from a Citizens' Advice Bureau.

Portman
January 2003 - Mutual Members action group has submitted over 700 forms to the Portman calling for the resignation of the chief executive because of the way members have been treated.

A report in the Mail on Sunday (www.thisismoney.com) criticises the chief executive for the way he has treated members.

Our Comment - In keeping with their normal practice with members' resolutions the Portman will now be very busy seeking ways to reject all of the forms and the resolutions.

Reduction of Savings Interest Rates
January 2003 - Some building societies have reduced interest rates on savings accounts from December 31st even though the bank base rate remains unchanged.  Among those wishing happy new year reductions are the Newcastle and Coventry.  These changes are in addition to previous reductions on savings rates of both societies since the last base rate change.

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Portman
November 2002 - Tim Tanner, founder of the Mutual Members campaign, is proposing to submit new resolutions and stand for election to the board and is seeking supporters.  Please go to www.mutualmembers.com for full details.

Our Comment - Last year's Portman voting form even beat that of the Coventry for being so blatantly undemocratic.  Portman closed two branches and totally ignored protests from local members shortly after proclaiming in its voting documents "The Portman's commitment to the branch network and the convenient access it provides has never been higher"!  See below. Please give your support to this campaign.

A Law Unto Themselves
November 2002 - Richard Dyson in the Mail on Sunday reports on how building society directors are able to remain unaffected by new government rules on fat cat greed - This is Money

Banking Code
November 2002 - The report on the review of this, the industry's own code of minimum standards, which applies to banks and building societies, has been published and most recommendations have been accepted by the industry.  The Code and the Code Guidance (the small print that customers do not see) are still subject to the FSA finalising guidance on the Unfair Terms in Consumer Contracts Regulations.  The revised code is due to come into effect on 1st March 2003.  Click here for the Review and here for the industry's Response.

Norwich & Peterborough
November 2002 -  The society has lost its appeal in the High Court against the Ombudsman's ruling that it should compensate members, who have TESSAs, for not paying interest at the same level as ISAs.

Our Comment - The society should reimburse all members who have been unfairly treated without the need for members to claim.

Stroud & Swindon
October 2002 - The society has been found in breach of the Banking Code on their 60 day notice account which had been superseded.  However, the Banking Code Standards Board (the industry's own monitoring organisation) oddly claims the society has demonstrated its commitment to the Banking Code!

Our Comment
The Banking Code Standards Board is supposed to be naming and shaming those organisations that fail to comply with the Banking Code.  This appears to be more like pleasing and appeasing.

Scarborough
October 2002 - According to Accountancy Age magazine, Gerald Waterworth, the finance director who stole more than £100,000 from the society and a similar amount from his local Citizens Advice Bureau, was not a member of the ICAEW despite calling himself an ACA.  The society had not checked.

Moneyfacts Awards
September 2002 - Moneyfacts the leading independent provider of personal financial data has announced the following awards for 2002. The awards were judged not only on how competitive the products were but also on clarity and fairness.

Building Societies Association
September 2002 - Graham Stow BSA Chairman said - "We can concentrate on delivering services the members want without worrying about the performance of our share price.  For example, sustaining a branch network rather than being forced, as the banks have been, to close branches to maximise profit by saving costs".

Our Comment - This seems to be at odds with the actual events of recent months where a large number of branches of building societies have been closed because they were uneconomical.

Scarborough
August 2002 - Secret society?  There is no mention in the annual report of the circumstances surrounding the sudden departure in February of the finance director, G. R. Waterworth.

Our Comment - It is rather odd that members are not considered important enough to be advised of the circumstances.  Members need to be assured that Scarborough's controls and procedures meet the FSA's prudential requirements.

Nationwide
August 2002 - Now that the AGM is over and despite a board assurance to the contrary, cuts have been made in savings accounts interest rates even though there has been no change to the bank base rate.  The cuts were effective on 9th August but all members have not been advised, so most people will be told well after the event.

Our Comment - Nationwide publicity says they are "open, honest and fair"!

Mortgages
July 2002 - A Moneyfacts report shows Egg to be the lowest cost source for mortgages for the third consecutive year.  Nationwide, with no shareholders to pay, comes second followed by HSBC and Intelligent Finance.  Bottom of the table of 35 lenders is Abbey National.

Nationwide
July 2002 - The 2002 election again demonstrated the Nationwide's commitment to opposing member nominated directors even though the directors told a Parliamentary Committee that they were in favour of them.  Despite this over 25% of voters want member-nominated directors on the board.  That represents the views of over 2.5 million people who want the society to be genuinely mutual.

Nationwide
July 2002 - Secret society?  There are no details in the annual report of member resolutions that were rejected by the board or the reasons for their rejection.

Our Comment - The board's lawyers waved a magic wand and suddenly all member resolutions have become illegal without any change to the rules but the words that they uttered in this magic spell have been kept secret.  Nationwide publicity says they are "open, honest and fair"!

Nationwide
June 2002 - Andrew Muir, who seeks to demutualise the society, has found that his election statement contained in the voting documents has been "accidentally" modified by the society to his disadvantage.

Portman
June 2002 - Two branches are to be closed in Pewsey and Ramsbury in Wiltshire because they are not "economically viable".

Our Comment - The Annual Report makes no mention of these planned closures at all.  In fact the Report states "The Portman's commitment to the branch network and the convenient access it provides has never been higher"!

As with the other societies, the announcement of these planned closures was made, by pure coincidence, after the AGM and after the BSA annual conference.  Needless to say local members are none too pleased.

The very mutual Portman directors refused to supply local members with information that would confirm the reasons for closures.  So members were forced to occupy the premises, on a shift basis, to keep a check on the numbers of customers.

Directors love to promote the concept of serving local communities (including sponsorship for the Bournemouth Symphony Orchestra in this case) because it is good PR and "loyal members" are good voting fodder.  But directors like their annual bonuses and these owe far more to profits than they do to service to members.  There is also the new head office building to be paid for.  Had the closures been announced before the AGM the directors would have faced a more difficult task and a lot of more bad press.

The directors of this society are renowned for being undemocratic, they changed the rules last year to reduce members' rights by making it even more difficult for members to nominate candidates or put forward resolutions.

Newcastle
June 2002 - Plans to close two branches - Liverpool and Glasgow.

Stroud & Swindon
June 2002 - Five branch offices of this society are planned for closure.

Staffordshire
May 2002 - The directors of this society plan to close no less than nine branch offices.

Nationwide
May 2002 - "Top Mutual Loses Points" - Daily Mail article by Alex Brummer.

Nationwide
May 2002 - All seven resolutions submitted to the board requesting the board to make itself genuinely mutual and accountable to its members have, not surprisingly, been rejected by the board.  The resolutions included a vote on directors' pay also year on year details of pay and policy for bonus payments to be published for all members to see.

Our Comment - In the spirit of mutuality, for which the Nationwide directors are not renowned, they have changed the meaning of the rules without changing the rules such that although any member can submit a resolution no member can ever get one accepted.  Nationwide publicity says they are "open, honest and fair".  Really?

Birmingham Midshires
May 2002 - £15,000,000 of windfall monies remain unclaimed by former members following the purchase of this society by the Halifax.

BSA Conference
May 2002 - Much use was made of the annual gathering of society directors to gain a propaganda advantage from the press by giving the impression that any member who attempts to stand for election to the board of a society is a carpetbagger.  The charge against members was led by Martin Ritchley of the Coventry BS the society with the very artistically designed and undemocratic voting paper and an MP on the board.

Members' Panels
May 2002 - Many societies, presumably through another BSA driven initiative, are now introducing "members' representatives" or "customer panels" probably to impress the membership.  Some like the Britannia are being very selective on whom they choose.  The title suggests that the non-executives, who are supposed to represent members' interests, have failed to do so.  However, some societies already have these panels and the title of "members' representatives" is quite misleading.  Their usual function is to complete simple questionnaires on rather mundane matters.

Fat Cats
April 2002 - Lord Young (outgoing  president of the Institute of Directors) criticised the role of "old pals" non-executive directors who hold several directorships, appear at board meetings once a month, rubber stamp whatever they are told and have little effect on the business.  One of the most outstanding examples of this is the previous board of the mutual Equitable Life now being sued by the new board.  Meanwhile Derek Higgs, with a multitude of non-executive directorships, has been asked by Patricia Hewitt to carry out a study on the independence of non-executive directors!!!

HM Treasury
April 2002 - The Treasury Select Committee has launched an inquiry into banking services provided to individuals and small companies.  Written submissions should be sent to the Clerk of the Treasury Committee preferably by e-mail at treascom@parliament.uk alternatively by fax 020 7219 2782 or by letter Treasury Committee, House of Commons, 7 Millbank, London, SW1P 3JA.

Britannia
March 2002 - A member-nominated candidate for the board, Richard Yendall, has revealed that Britannia provides more beneficial rates on accounts to members of UNISON than ordinary members.  The list of directors shows one non-executive director to be ex-deputy secretary of UNISON.

Members are asked to vote to re-appoint the auditor but, strangely and unusually for any voting papers, the auditor is not named.  Elsewhere it is revealed that the auditor is PricewaterhouseCooper.  The list of directors shows one to be an ex-partner at PricewaterhouseCooper.

Our Comment - Now we know why they do not want members to be directors.

Portman
March 2002 - Five directors are stated to be standing for re-election although two have never previously been elected.

Our Comment - Another touch of amnesia or fiddling in the boardroom?

Britannia
March 2002 - Information on Loyalty Bonuses has been sent to members.  The majority of payments amount to a few pounds.  Accompanying literature states "Mutuality - how it works for you" and goes on to say that members can have their say on how the society is run.

Our Comment - The heading should be "Mutuality - how our version works against you" particularly when the directors do not abide by a ruling made by the Ombudsman or perhaps it should be "Have your say and go away".

Non-executive Directors
February 2002 - The DTI has announced that there is to be a government review of the role of non-executive directors due to concerns about lack of independence, close ties that sometimes exist between executives and non-executives and the small circle of people holding large numbers of boardroom positions.

Summary Annual Reports
February 2002 - Some directors feel that it is safe to report their annual payments in the Summary Reports after the last three years of greed.  However, although year over year figures are shown for balance sheet results as in the Full Report, directors are still rather shy about showing comparative years for payments to themselves.  Wonder why?

Scarborough
February 2002 - The Scarborough has opened a new postal savings account that offers 0.2% gross up to £24,999 and 0.4% gross up to £250,000!!

Our Comment - We hope that not too many people get killed in the rush.  However, it is not expected to entice new members. The account is actually another "trick of the trade" for new accounts with terms that will transfer members' money automatically from their original accounts into this account at maturity.  Scarborough directors open new accounts and close existing ones every month so beware.

TESSAs
January 2002 - A league table produced by Chase de Vere Investments for the performance of TESSAs, over a five year period ending December 2001, shows the Julian Hodge Bank as the top performer with Northern Rock in second place.  Nationwide the self-styled "consumers' champion" was 34th out of 56 types of TESSAs from 40 different banks and building societies. that took part in the survey.

Nationwide
January 2002 - The Nationwide is advertising for a non-executive director to replace a retiring director at the next AGM.  The candidates will be selected and one will be appointed by the board in March but will not be nominated by members.

Our Comment - This open advertisement is seen as part of a PR exercise in the ongoing battle to stop member-nominated directors from being elected to the board whether they are pro-mutual or not.  The directors have been criticised for the claim they made to the Parliamentary Treasury Committee that they welcome member-nominated directors when in fact they oppose them vigorously.  Anyone in favour of genuine mutuality, accountability and elections that are not fiddled need not apply.  Candidates must be good at rubberstamping and agreeing with everything the chairman says. 

The Banking Code and You
January 2002
Did you know that the Banking Code applies to building societies as well as banks?

The Banking Code is a voluntary code of self-regulation for basic good behaviour that banks and building societies are supposed to adhere to but many do not.  The code is produced by the British Bankers’ Association (BBA) in conjunction with the Building Societies Association (BSA).

It is supposed to be a code of good practice and it may give the impression that it is a mark of service excellence - but it is not.  It represents a baseline below which standards should not fall.  There is a danger that societies can advertise the fact that they conform with the code and thereby present an appearance of legitimacy to practices that may not be covered by the code and are not always in the best interests of members.  The code leaves much to be desired and is not a complete assurance against bad practices.

Usually banks and building societies do not appreciate receiving complaints or comments on improving their services.  However, an independent Reviewer has been appointed to receive your comments and, although this has not been widely advertised, she is inviting people to write to her. 

What is wrong with the present code?

We do not believe that societies conform to code key commitment 'a', which is - “We will act fairly and reasonably in all our dealings with you” for the following reasons:

• There is nothing on the cover to show that the code refers to building societies.  We would prefer a dedicated code.  Many building society members are unaware that it affects them.
  

• In many branches copies are literally kept under lock and key.  We believe they should be on display alongside product literature and should receive maximum publicity.
  

• Reference to the code is often buried in the very small print in product literature.
  

• The present code has not stopped the practice of creating so called "superseded" accounts, which are then downgraded.
  

• The code has not made societies conform to rulings made by the Ombudsman for all similar cases when a ruling has been made on a representative case.
  

• The code allows societies one month delay to notify members when savings interest rates are reduced or put another way rate changes can be backdated by up to one month.  We believe the period should be two weeks maximum.
  

• It allows savings interest rates on notice accounts to be changed adversely out of line with base rate movements without allowing members immediate access to their funds.
  

• The current version of the code does not conform entirely with the requirements of the Office of Fair Trading.  The Ombudsman also expressed disappointment with the revisions to the code.  We believe that, although there may be consultation, the code is  weighted heavily in favour of the industry.
  

• Members and potential members are not made aware of those societies that fail to comply with the code.
  

• The review process should receive greater publicity as recommended by the government funded Banking Codes Review Group.

The Banking Code did not arise because members were giving  building societies a hard time, quite the reverse.  There is a need for societies to conform to the spirit as well as the letter of the code.  The code should be for the benefit of members and not for the benefit of lawyers who are paid to find loopholes at the expense of members.

Click here to access the BCSB website for the Banking Code

Click here to view the BSMA submission to the Banking Code Reviewer

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Moneyfacts
December 2001 - A Moneyfacts research report shows the top two best-buy places for mortgages to be Egg and HSBC.  Nationwide with no shareholders was third.

Britannia
December 2001 - The Financial Ombudsman has ruled that Britannia should compensate members who have TESSAs for not paying interest at the same level as ISAs.  However, Britannia directors do not give in to mutuality too easily, they will only compensate those people who go through the complaints procedure.  Those who do not complain will not be advised that they have been short-changed.

Our Comment - So much for mutuality at Britannia.  If you have or had a Britannia TESSA be sure to check for compensation.
Nationwide ("Consumers' Champion?") directors are still holding out against playing fair and Norwich & Peterborough directors are going to fight it out in the high court.

Gainsborough
November 2001 - Another small society, with no branch offices, will disappear in 2002 to be absorbed by the Yorkshire.

Department of Trade & Industry
October 2001 - The DTI has announced that plc shareholders are to be given the right to an annual vote on directors' pay and will be provided with details of performance and remuneration policy.

Our Comment - This will make plcs more democratic than "mutuals".

Scarborough
October 2001 - Beware - This society continues to be one of the slowest to reveal to members that it has reduced savings interest rates.  The Banking Code, the industry's own voluntary code of "basic good behaviour", allows societies to backdate any notification by up to one month and the Scarborough sails very close to the limit of this already excessive allowance.

Beware - New accounts are opened every month and similar accounts are closed then rates tend to be reduced.

Beware - Some of their accounts now pay only 0.16% on as much as £1000!

Leeds & Holbeck
October 2001 - The management of this society continues to campaign to change the name by progressively reducing the size of the word Holbeck on documentation and advertisements.  While the Nationwide has long since dropped the title of building society from its documents.

Leeds Permanent Building Society
October 2001 - Did you have a mortgage with the Leeds Permanent Building Society?
The Halifax wishes to contact everyone who took out an 'interest only' mortgage with the Leeds before October 1989 and repaid it.  The Halifax has found that many members may have been accidentally overcharged interest by a small amount and wishes to ensure that those members are reimbursed.  Contact 0845-604-1280 for more information.

Nationwide
October 2001 - This self styled '"consumers' champion" was brought to book by a genuine consumers' champion in the form of the Daily Telegraph's Jessica Gorst-Williams who investigated a case where Nationwide was imposing two mortgage early redemption penalties on a member.  The sums involved were £11,441 and £20,389.  The newspaper reports that Nationwide insisted it had every right to impose two charges but, after failing to find a document that agreed to the charges bearing the member's signature, finally and reluctantly agreed that the society's management was wrong and had to refund the £20,389 to the member.

Our Comment - Jessica's warning here is be careful what you sign or the "consumers' champion" will sting you.

Britannia
September 2001 - The Sunday Telegraph reports that having lured people into opening TESSA-only ISAs paying a rate of 7.25% the Britannia has slashed the rate by an astonishing 1.75% to 5.5%.  The reduction is double the amount by which the bank base rate was cut.

Mutual Greed
August 2001 - A report by Steve lodge in Moneyfacts on society chief executives' very mutual pay increases shows that the greed continues and most are still helping themselves to bigger and bigger handfuls of members' money.

Brian Davis - Nationwide still gets the "Biggest Snout in the Trough Award" at £768,000.  That is over twice as much as the next in line - the Yorkshire.  No wonder a member resolution for voting on directors' pay was rejected by the Nationwide directors.

Brian Thomas of the little Hanley Economic which has just four branches gets the "Biggest Percentage Increase of the Year Award" at no less than 120% up to £167,000.  That is more than he would get if he had to run the economy for the whole of the United Kingdom.  The runner up is Colin Smith of the Beverley with just one branch at 72% up to £147,000.

The chairman of the BSA - Martin Ritchley, who is also the chief executive of Coventry, says that society members have the right to vote if they are not happy about the leapfrog pay increase game that is going on among directors.  Just how members' votes are supposed to stop the greed only Martin Ritchley can say particularly as the Coventry probably uses the most artistically biased voting papers of all societies.

Nationwide
August 2001 - Brian Davis - Chief Executive to "retire" at year end.

Our Comment - By "retiring early" rather than leaving he will receive an immediate pension of £314,000 per year through the generosity of Nationwide members and that will be on top of the salary and pension from his next job/jobs.  This annual payment for doing nothing is more than the majority of societies pay for a chief executive who is working.

Scarborough
August 2001 - The annual report shows that an NHS executive director, Kate Priestley, has joined the board as a non-executive director.

Our Comment - It would seem that either a full-time job with the NHS leaves plenty of time to spare or turning up at society boardroom meetings is a very occasional affair.  Now we know why there are problems in the NHS.

Nationwide
July 2001 - From the AGM - In the board's continuing fight against members' rights, it has decided to outlaw members' resolutions without any change to the rule book.  This is said to be the latest legal interpretation of what members' are not allowed to do.  This comes in response to attempts to make societies more open and accountable.  So in future you can expect directors to be even less open, less accountable to their members and even less mutual and democratic than they already are, if that is possible.

In the Annual Report the chairman says ....this year we decided we should put our house in order...

Our Comment - We look forward to the year when the Nationwide directors put their house in order.  Then they will treat members with respect, stop their greed and stop using dirty tricks.  The Annual Report shows that the directors are still helping themselves to large portions from the trough with a pay increase of 10% equal to four times the rate of inflation but lower than previous years 25%.

Ilkeston Permanent
June 2001 - This small society will be the next one to disappear, to be taken over by the Derbyshire this year.

Nationwide
June 2001 - The latest Nationwide propaganda leaflet states "Members - not - shareholders are our focus so you can trust us to be open, honest and fair".  

Our Comment - The exceptions seem to be with voting documents and when giving evidence to the Parliamentary Treasury Committee.  The same leaflet clams "Nationwide has always been a natural consumer champion ...".  Our members experiences make this a very sick joke.

Lambeth
May 2001 - "Putting our customers first" (not members).  The Annual Report and Accounts contains a slight error, despite being voted on and approved and despite the fact that few members saw the report anyway.  The "compensation package" for the resigning chief executive was a mere £448,000 not £361,000 as shown in the report.

Our Comment - Unfortunately members, who paid for his leaving present, are not so well looked after as Lambeth rates and terms are pathetic.  They have a savings account entitled "High Yield" with an interest rate of 0.72%.  But that really is high compared with other accounts that pay an incredible and mind boggling 0.080% on an investment of up to £1,000!  The overwhelming majority of members are not made aware of the golden handshake or any other details of moneys taken by the directors.

BSA Conference
May 2001 - New chairman Martin Ritchley (Chief Executive of Coventry BS) says this year's event looks at ways to increase accountability to members.

Our Comment - It is doubtful if they looked at it for very long as accountability is not a very popular subject with directors.

Nationwide
May 2001 - Nationwide's latest advertising campaign says it offers better savings rates not just today but always.

Our Comment - Better than what is not made clear as other sources, including banks, offer better rates and Nationwide's own rates are being cut along with all other societies.  It is doubtful if the Advertising Standards Authority would agree with the claim.

Equitable Life
May 2001 - Some complaints about the previous board (all of the directors had to resign) of this troubled mutual society were that it was secretive, arrogant and treated members with contempt.  However, the new board of appointed members includes a Chelsea Building Society part-time director.  This does not bode well for change.  The voting papers, yet again, are well skewed towards the appointed members who are described as standing for "re-election" although never previously elected.  Member candidates are treated as second class.  The need to use these tactics does not demonstrate either self-confidence or strong leadership.

Nationwide
April 2001 - The board has rejected all of the pro-mutual resolutions put forward by Tim Tanner.  The directors have stated that the resolutions interfere with their ability to run the society.  On the contrary their action has in fact interfered with the rights of all members.

This is probably the worst case of anti-mutual, anti-democracy action in the history of building societies.  It flies in the face of the recommendations in all the research papers that have been commissioned by the Building Societies Association, and that is the organisation that is run by and for building society directors themselves.  It also makes a mockery of the evidence given by Nationwide directors to the Treasury Parliamentary Committee.

This action demonstrates the desperate need for proper regulation of these pseudo-mutual society directors.  They can treat members with utter contempt because there is no regulatory body to control them.  Only court action can bring them to book so they know that they can get away with it.

Quote from Nationwide Building Society Directors' Memorandum given in evidence to a Parliamentary Committee:-
"Building Societies value their democratic process but if democracy is abused by "bending" the rules it can fall into disrepute".  Who bends the rules?  

For more information on the resolutions go to  www.MutualMembers.com

Coventry
March 2001 - The voting papers are not only highly colourful and highly biased but this time the accompanying letter contains what is almost an instruction rather than a recommendation for members to vote in favour of the board's wishes.  This is the society with the democratically elected Member of Parliament Gillian Shephard on the board.

Our Comment - We recommend that you vote against everything on such a grossly contrived and undemocratic document.  We also recommend that anyone in her constituency should write and complain to Gillian Shephard.

Hinckley & Rugby
February 2001 - The voting paper also carries a "sits vac." advertisement for members who may wish to be considered for co-option to the board.

Our Comment - At first sight this gives an appearance of a slight inclination towards it becoming a mutual society.  Unfortunately the voting paper also has the "hidden" tick box in the small print on the back which ruins the whole illusion.

Portman
February 2001 - Portman directors have rejected the pro-mutual, pro-democracy, pro-accountability resolutions put forward by Mutual Members.  They say there were not enough valid forms.   

Our Comment - Portman directors' definition of "valid" will no doubt be highly invalid and highly anti-mutual.  Please follow Tim Tanner's instructions at www.mutualmembers.com and find out if yours was one of the rejects and why.  Either way please let Tim Tanner know the result of your enquiry.  Resolutions for democracy, accountability and mutuality are clearly against the principles of the directors.

The Observer
February 4th 2001 - Andrew Bibby reports on the circumstances surrounding Norwich & Peterborough's rather sad attempt to be "democratic" in its approach to recruiting directors.  The chief executive Matthew Bullock stated "Member-nominated candidates do not necessarily increase accountability.  It's a romantic notion.  Who do they represent"?

Our Comment - The directors do not like the idea of being accountable to members and they will fight tooth and nail against it and that is exactly what they did with their "publicly advertised recruiting campaign".

January 2001 - From the "Moneyfacts" league table for TESSAs - top performer is Earl Shilton BS, bottom is Manchester BS.  Nationwide BS, the UK's  largest building society, is a sad 44th out of 89.

Consumers' Association
January 2001 - Ballot papers for the CA council have recently been sent out.  The format is exactly what we would like so-called mutual societies to adopt.  Names of candidates are arranged with no indication as to whether they are existing council members or not and no special highlighting of "preferred" candidates.

Our Comment - The paper was devised by Electoral Reform Services Ltd.  The company, with a rather misleading title, also produces the ballot papers for the Nationwide.  So why are Nationwide ballot papers so anti-mutual?  This is because Nationwide directors dictate the design and they do not approve of democratic balloting.  This is despite the agreement of the BSA, in 1996, to a code of practice which said ballot papers should be democratic and despite the word of the Nationwide chief executive to the Parliamentary Committee to welcome member-nominated candidates.

One of the candidates for the CA council claims to have worked with the BSA to make their Model Rules more open and democratic.   However, the BSA has yet to get around to including democratic methods in its Model Rules for Ballots.  The major problem has been that no one at the BSA has yet been able to understand what the words democracy and mutuality mean.

Go Back Upstairs

BUILDING SOCIETIES MEMBERS ASSOCIATION
www.building-societies-members.org.uk