Skipton takes over Scarborough - Yorkshire takes over Barnsley -  Robert Sharpe ex Portman CEO to take over as West Bromwich CEO - Derbyshire & Cheshire merge with Nationwide - Skipton Expansion Continues - Poor Banking Code - Kent Reliance Fat Cats - Bumper Bonuses at Building Societies - Fat Cat Pay Rises 14% - Portman states building societies must merge to survive - Nationwide U-turn - Nationwide Favours Account Charges - Nationwide Members Fined £1m - Nationwide "Proud to be Indifferent" - "A Mockery of Mutuality" - "25% Pay Increase at Nationwide" - "New Banking Code - Old Tricks" - £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)  

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.hmtreasury.gov.uk/consultations. 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.

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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 had continued 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.

Top of Page

"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 oppositi