Back to Welcome 

Equitable Life Assurance Society
December 2000 - No one can be unaware of the plight of this "mutual" society.  The directors acted in a very arrogant and unmutual fashion towards members.  They rigged voting documents and opposed member candidates for the board, just like some building society directors.

Following its downfall, a number of action groups have come into being to try to help members and to seek to convert the society to true mutuality.  For links to the action groups start at www.emag.org.uk.

The Chief Executive jumped into the first lifeboat and took off with pockets loaded with buoyancy aids.  All of the non-executive directors have resigned and will soon be using the remaining lifeboats and no doubt will be well compensated for their ineptitude while members try to salvage the wreck.

Stephen Byers
December 2000 - Stephen Byers the Trade & Industry Secretary has gone back on his word to introduce legislation to prevent directors of building societies from using the old trick of forcing borrowers to buy home insurance.  No explanation for this anti-consumer U-turn has been given.

Nationwide
December 2000 - Newspaper reports state that, when asked about his reaction to MutualMembers putting forward a number of resolutions for greater board accountability, Chief Executive Brian Davis said - if members do not like what the board has done then they have the opportunity to vote for a number of directors each year!

Our Comment:
Hmm?  Brian Davis says the strangest things.

Banking Code Standards Board
December 2000 - Following a "mystery shopper" study on banks and building societies the BCSB has reported that the level of compliance with the industry's own voluntary code is unacceptably low.

Our Comment:
So what happens now?  Nothing.  In fact nothing has changed since their previous survey in July.

Norwich & Peterborough
December 2000 - As an act of "mutuality", instead of asking members, N&P advertised nationally for two new board members to be co-opted to the board.  They received 210 applications.  Of the two selected one was an ex-executive N&P director and the other was not a member of the society.  Normally any member seeking to stand for election is required to have been a member for two years.

Our Comment
Bang goes mutuality again.

More Interest Rate Cuts
December 2000 - Some societies are reducing savings interest rates and mortgage repayment rates but in some cases the reduction in savings interest rates is greater than the reduction in mortgage repayment rates. 

Our Comment:                                                    
Meanwhile fat cats, even in the small societies, continue to stuff their pockets with more and more handfuls of members money.  The table below (July 2000) of pay increases for some directors shows why they use dirty tricks to prevent members from gaining a seat on the board.
Some directors have been on boards well beyond the period given in the Prudential Note by the supposed regulatory authorities.

Marks & Spencer
November 2000 - Building societies have been criticised for mis-selling mortgage protection insurance, which protects the lender rather than the borrower, to people who cannot benefit from it such as self-employed.  Press reports state that M & S are now offering better mortgage protection insurance at better rates than building societies do for their own members.

Financial Ombudsman Service
September 2000 - Reported to have supported the "guidance" given by the Banking Code Standards Board to bank and building society directors who are slow to conform in bringing TESSAs into line with ISAs.  The BCSB first issued "guidance" on this subject to society directors in January 2000 but it was ignored.

Our Comment:
You can get a copy of the guidance note from the Ombudsman (Tel: 020-7964-0538).   Follow its advice you could be losing money and the directors of societies will not tell you.

Secret Cut on Savings Interest Rates
September 2000 - Building societies are reported as "cutting savings rates by stealth", some by as much as 0.5% even though the base rate has not changed since February  The report states that the list of culprits includes, but is not necessarily confined to, Leek United, Newcastle, Portman and Scarborough.

Our Comment:
The Office of Fair Trading issued "detailed guidelines" to societies in February 2000 on this subject.  So much for the OFT.  Keep a close check on your savings accounts.

Banking Code Standards Board - TESSAs & ISAs
September 2000 - The Banking Code Standards Board has "advised" societies that, to conform with the code, TESSA interest rates (TESSAs are now closed accounts) must be in line with ISA rates.    Several societies have now adjusted their TESSA rates up but have reduced ISA rates to compensate.   The BCSB has also "advised" that transfer penalties should be removed.

Our Comment:
Keep a check with societies on your accounts, they may not rush to advise you of any changes.

Office of Fair Trading
August 2000 - Stephen Byers announced that John Vickers will replace John Bridgeman as Director General at the end of his term, effective October 2000.   A Public Accounts Committee report criticises the OFT for poor performance on behalf of consumers.

Our Comment:
Actions to stop malpractices by building society directors are long overdue but do not expect any action from the OFT.  It is a Government organisation that has been in existence since 1973 and its main function is supposed to be to "safeguard the economic interests of consumers" yet we live in "Rip off Britain" (see About Building Societies).

Bristol & West
August 2000 - The ex-building society kept customers' savings of £15.5 billion in closed accounts earning only 0.1% gross and did not advise savers about the low interest until intervention by the Banking Code Standards Board.

Our Comment:
Beware, there are also many building society savings accounts with rates well below the rate of inflation and directors are quite happy for members to keep their money in these accounts (see below).

Nationwide
July 2000 - As expected, Brian Davis (chief executive) had a severe bout of amnesia and forgot all about his statements to the Treasury Select Committee.  Instead of encouraging support for BSMA member Alan Debenham the board "non-rigged" the voting paper, as is the custom with Nationwide, and recommended that members should vote for anyone except Alan Debenham.   However, given the odds stacked against a genuinely mutual candidate by an undemocratic board, Alan did extremely well in the election and we hope he will try again.
Nationwide directors have made it quite clear that they are not to be trusted, whether it concerns giving evidence to Parliamentary committees or on voting procedures.

Nationwide
July 2000 - The annual report states:
1  "Nationwide is a "champion of consumer causes"
2  "The number of complaints fell by 16%".
3  "It is only by by seeking to be honest and open and offering consistently good products that we are
    able to maintain our reputation for trust and good value".

Our Comment:
1  Nationwide appeared near the top of the list in the October 99 Consumers Association report on
    complaints against building societies and banks.
    Nationwide has a savings account paying only 1.14% interest (before tax).
    Nationwide directors received yet another fat cat increase of 25%.  Seems more like a champion of
   director's causes.
2  A reduction of 16% is not very meaningful particularly in the light of the CA report.  Note: The
    directors' bonuses are, supposedly, partly based on levels of complaints.
3  If this is so, why are they recruiting yet more spin doctors?

Skipton Building Society
July 2000 - A one-off "loyalty" bonus is to be paid to members, following a massive increase in profits  (see below).  However, only those members who have had an account since September 1996 will qualify as "loyal".   The amount per member is expected to range from £5 to £500 (less tax if applicable).   Executive directors were the most "loyal" they received a bonus of £83,000.  All other "non-loyal" members received a note of condolence.

Our Comment: It might have been more in keeping with the much misused word "mutuality" if savings and mortgage rates had been realigned for everyone.

Banking Code Standards Board
July 2000 - A new survey reveals that many of the societies that signed up to this voluntary code are not complying with it.

Our Comment: Surprise, surprise.

Building Societies Association
July 2000 - Outgoing BSA chairman David Smith (Chief Executive Dunfermline B.S.) was reported as departing with a scathing criticism of some members "these small groups of individuals motivated by greed".

Our Comment: See tables below for definition of greed.

Mutual Fat Cats                                                                 (Back to Interest Rate Cuts)
July 2000 - From annual reports.

Our Comment: How do these increases compare with your savings account interest rates?  Some pay only 0.5%.  Even directors of the little societies are jumping on to the gravy train and helping themselves to large handfuls of members money.  Nationwide gets the "BIGGEST SNOUT IN THE TROUGH AWARD".

Nationwide Building Society
June 2000 - The annual report reveals that once again the directors awarded themselves large handfuls of members money.  Brian Davis received yet another fat cat increase of £116,000.   Overall, directors helped themselves to yet another 25% pay increase last year.  It pays to decide Nationwide.

In accordance with the usual bad practice, by Nationwide directors, election documents have been biased against the members' candidate Alan Debenham.   An opposing candidate who has never been elected has been put up by the board as an "existing director".

Our Comment:   People are expected to be honest and truthful when answering to Parliamentary committees.  Brian Davis - Chief Executive told the Chairman of the Parliamentary Treasury Committee, that there should be member candidates on the board (see below for quotes from Nationwide directors' evidence).  One might have expected him to honour his word, however in the true tradition of Nationwide directors (putting themselves first), the ballot papers have once again been biased.

The directors are also presenting last years election results. This, no doubt, is to guide your thoughts against Alan Debenham.  Alan worked very hard to get the necessary number of supporters and received no assistance whatsoever from the Nationwide secretary or the directors who call themselves "customer friendly".

The lowest Nationwide savings account rate at the moment is 1.14%.  Not even up to the current inflation rate and somewhat below the directors' "help yourself" rate of 25%.         (Back to Bristol & West)

Savings Accounts Rates Below Inflation Rate
June 2000 - A report carried out for a Sunday newspaper highlights (for those who were unaware) the "rip-off" savings accounts operated by banks and building societies.  The report states that the average savings account now pays less than the rate of inflation.  The report described it as a "strategy of confusion marketing".

Our Comment:   The current rate of inflation is about 3% but some accounts pay as little as 0.1% even before the deduction of tax.  Anyone with money in accounts of this type is actually paying the banks and building societies to keep their money and making the directors very happy too because these accounts are making the biggest profits.

Bradford & Bingley Building Society
June 2000 - Voting forms for the purpose of conversion are being sent out.  The last B & B voting paper was biased against a pro-mutual candidate.   This time, needless to say, the voting (proxy) form is not biased but B & B directors who previously claimed to be so strongly against conversion have now gone to the extent of using newspaper advertisements to encourage members to vote.

Bradford & Bingley Building Society
April 2000 - Not surprisingly, in view of the cunningly contrived election documents (see below), BSMA member Philip Crozier failed to get elected to the board.    However, he scored 120,000 votes against around 500,000 for each of the "pro-conversion" candidates.

Our Comment:  We believe this result was very good indeed given the effort and members money that the board had put into preventing a pro-mutual candidate from gaining a seat and the overwhelming desire to carpetbag the B & B.  We hope that this will not put Philip off from trying again as a candidate for another society, as the B & B will soon become another bank.

The Treasury
April 2000 - The Government announces that it is to introduce CAT standards for mortgages.  However, the standards will only be voluntary.

Our Comment:   If everyone seeking a mortgage chooses only those that meet the Government's CAT standards then all societies will have to offer only CAT standard mortgages.   Unfortunately people are not being made aware and will continue to put their trust in people who cannot be trusted.

Newcastle Building Society & Nottingham Imperial Building Society (RIP)
April 2000 - Newcastle voting papers are now being sent out.  The death of the Nottingham Imperial gets a very brief tombstone inscription in the Summary Report.  In the same newsletter there is an article on why mutual societies should not disappear (see below).

Portman Building Society
April 2000 - Some carpetbagging members who were undemocratically expelled are being reinstated following a small claims court challenge by one member.  The society has had to pay compensation and costs.

Chelsea Building Society
April 2000 - Notice of AGM and Proxy form - unlike the Bradford & Bingley, the form has a full complement of "FOR" and "AGAINST" boxes to complete.   However:-

    The Ordinary Resolution requires a vote for or against the Annual Report and Accounts but only a Summary Financial Statement has been supplied and there is no offer to provide the Full Annual Report to members.  We recommend that members always request a copy of the Full Annual Report to members.  How can members be expected to vote on a document they have not seen?

    There are two Special Resolutions to "correct errors in the rules" but no wording of the rules concerned has been included in the notes.  We advise members to obtain a copy of the Rule Book to ensure that they are clear on the changes they are being asked to vote on.

    There are two Ordinary Resolutions Proposed by Members.    Unfortunately these are carpetbagger resolutions to consider demutualisation or sale.  Directors want members to vote FOR the resolutions as they say they regularly consider demutualisation or sale.  Therefore, voting Against should mean that directors cease to consider demutualisation or sale, at any time, and should prevent directors from carpetbagging.

Bradford & Bingley Building Society
April 2000 - Six candidates stood for election to the board but only five seats.  One was a member candidate Philip Crozier, and surprise surprise, was not recommended by the other five or the remaining six.

They tried to declare Philip Crozier's application invalid but gave up when challenged.  So the next step was to distort the ballot paper with the aid of the dirty tricks department.

"The board believes firmly in the democratic process and encourages you to use your vote"  So states the page attached to the cunningly contrived voting paper.

The directors (the ones that do not want demutualisation but will not resign) are so democratic that unless people read the other side of the voting paper and marked the box that is carefully buried in the notes, Philip Crozier (who they do not recommend), is unlikely to get voted on to the board.

How is that you may ask?    Because the notes say, in effect, that if you do not vote in favour of your board's recommended directors, you will give your vote to the proxy unless you find and mark the box.  Unless you have someone else attending the AGM, the proxy is the chairman, and the terribly democratic chairman does not want a member candidate.   There is only one "AGAINST" box on the normal side of the paper and that just refers to auditors.   The directors just happen to forget to put all the other "AGAINST" boxes on the paper.  What will they forget next?

You have got to hand it to building society directors - they really do know how to produce bias voting papers and they can spell the word "democratic" too, unfortunately they do not like what it means.  Would you believe the B & B is, at the moment, still a "mutual"?

Note: One of the so-called "existing" directors has never been elected to the board but members are asked to "re-elect" him!  Another small oversight?

STUDY BUILDING SOCIETY VOTING PAPERS VERY CAREFULLY.  YOU CAN BET YOUR LIFE THAT THE DIRECTORS OF ALL OTHER SOCIETIES WILL FOLLOW SHORTLY.

            Below is the wording on the Back of the Bradford & Bingley Voting Form

Notes on Voting

Your vote on AGM resolutions                                Voting Conditions
1. You may vote in person at the Annual General       5. You must be at least 18 years old on or
    Meeting or you may appoint a proxy to attend           before 18 April 2000.
    and vote on your behalf.  As your proxy you           6. You must be a Member who (a) had a share
   may appoint either the Chairman of the                    investment in the Society of at least £100 on
    meeting or anyone else.  A proxy need not be          31 December 1999 or (b) owed at least £100
    a Member of the Society.  If you wish to                   to the Society on a mortgage loan on
    appoint someone other than the Chairman,              31 December 1999.
    insert the name and address of the person           7. You must be an investing Member (irrespective
    you wish to appoint in the space provided                 of account balance) or borrowing Member
    overleaf.                                                                    (owing at least £100) on 14 April 2000
2. If you wish to instruct your proxy how to vote             voting by use of this form or on 18 April 2000 if
    on the Ordinary Resolution, place an 'X' in the         if voting in person at the Annual General
    appropriate box on the voting form.  If you do          Meeting.
    not do so your proxy may vote, or abstain, as        8. You must be the first named account holder
    he or she thinks fit.  If you do not wish to vote          in the Society's records
    on the Ordinary Resolution please strike                9. You must sign the voting form in order for
    through both the FOR and AGAINST boxes in          your votes to be valid.
   relation to that resolution.                                         10. You may vote once only irrespective of the
3. If you wish to instruct your proxy to vote for                number of accounts you hold.
    any Director standing for Election, please place      
    an 'X' in the appropriate box on the voting
    form.  If you do not use all votes, your proxy is    Powers of Attorney
    authorised to cast the unused votes, or abstain,  11. Holders of Powers of Attorney wishing to
    as he or she thinks fit, unless you instruct your          exercise their entitlement to vote may do so
    proxy not to by placing an 'X' in this box o.            by attending the meeting, but may not appoint
4. A proxy is not entitled to speak at the                       proxies.
    meeting except to demand or join in
    demanding a poll.  Unless instructed otherwise,
   your proxy has authority to abstain or vote as
   he or she thinks fit on any procedural motion
    or other poll demand put to the meeting in
    accordance with the Rules of the Society.

                                                          Did you spot the box?          (Back to B & B)

Nationwide Building Society
April 2000 - BSMA member ALAN DEBENHAM has obtained the necessary nominations and will be trying once again for election to the Nationwide Board.   Thank you to all those who gave him their support.

PLEASE NOTE:-

THIS TIME WE EXPECT BRIAN DAVIS, CHIEF EXECUTIVE OF NATIONWIDE (and the other members of the board):

    TO HONOUR HIS WORD, GIVEN TO A PARLIAMENTARY COMMITTEE (see below).

    TO EXTEND A WELCOME TO ALAN DEBENHAM AS A MEMBER NOMINATED CANDIDATE.

    NOT TO PUT UP AN OPPOSING CO-OPTED "DIRECTOR".

    NOT TO BIAS OR DISTORT ANY OF THE BALLOT DOCUMENTS, IN ANY
    WAY WHATSOEVER, AGAINST ALAN DEBENHAM.

Coventry Building Society
April 2000 - Member of Parliament Gillian Shephard was co-opted to the board last year and is seeking members votes in the forthcoming elections.

Our Comment:   It must be nice for her to keep the day job, have no opposition and occupy the seat before the election.  Rather different from a proper democratic Parliamentary election process.
The existence of someone who was democratically elected as an MP on the board of an organisation in an industry that is renowned for being anti-democracy is of great concern.

West Bromwich Building Society
March 2000 - BSMA member Stephen Peters submitted nomination papers, with sufficient supporters, for election to the board as a pro-mutual, pro-democracy candidate.  The directors kept him waiting for two months then rejected his application stating it was out of date (the rules do not include a time limit) then appointed two directors of their own choosing.  These two will be seeking election soon!

Our Comment:   What do you think about people like these?  Please see Sir Teddy Taylor's comments below.

Scarborough Building Society
March 2000 - Executive directors received pay increases in 1999 of 41%!  Overall increase for the board 23%.
Stafford Railway Building Society
March 2000 - Chairman received a pay increase of 19% in 1999 and other directors got 11% (Gravy train society?).

Our Comment:   The fat cats are still raiding the till, even in the small societies.
Scarborough does not even send out prepaid envelopes for members to run their postal accounts but pay restraint in the boardroom is definitely out of fashion.
Make sure that you request a copy of the Full Report and Accounts from your own society - let us know about any fat cats.  It might be easier to identify those who are not grabbing large handfuls of members' money.

Skipton Building Society                                                                   
February 2000 - Pre-tax profits soar by 25% to £50 million due mainly to the sale of Dealwise its share dealing subsidiary.   Assets now above £5 billion.  (Back to Skipton - August)

Our Comment: It is a pity the directors cannot use this seemingly excessive increase to reduce the interest margin for the members.  Check the Full Annual Report to see increases in directors' bonuses.

Small Societies
February 2000 - A "Moneyfacts" report states that small societies such as Lambeth, Norwich & Peterborough, Marketharborough and Scarborough are offering mortgages on terms that have been condemned by the Consumers' Association including unfair or hidden penalty clauses for early redemption or unfair insurance requirements.

West Bromwich Building Society
February 2000 - Ray Dickinson, a non-executive director is declared by this society to be "Members' Champion".

Our Comment: Ray Dickinson is by no means a members champion.  He was co-opted by the board and did not stand for election as a members' representative.  The West Bromwich has consistently opposed the nomination of members trying to stand for election as non-executive directors.

Skipton and Chelsea Building Societies
February 2000 - Both societies have accepted resolutions calling for the directors to consider the benefits of conversion to plc status.  This is because the directors say they regularly consider conversion and will continue to do so but foresee no change.

Our Comment:  We agree with this democratic response.   However, as the directors of both societies say they regularly consider conversion we presume that if they were members or directors of the Portman they would be removed from office for this.

Portman Building Society
February 2000 - Directors reject a member's resolution and say it does not conform with the rules but will not say which rules.

Our comment:   Probably another rule says they don't have to, so that they can just keep on rejecting any resolutions from members.
Whilst we support the directors in their fight against carpetbaggers, we do not like the autocratic way they have suspended membership.  We believe the directors should seek approval from their members before taking such action.

Consumers Association
October 1999 - The Consumers Association names and shames top ten worst mortgage lenders.  In descending order of complaints:-

Halifax, Abbey National, Northern Rock, Woolwich, Nationwide, NatWest, Alliance & Leicester, Bristol & West, Bradford & Bingley, Barclays.

The.CA report lists 20 unfair practices used by the mortgage industry including:-

        Redemption penalties - 58%
        Calculation of interest - 17%
        Compulsory insurance - 7%

Interesting Quotes from the "Treasury Select Committee 9th Report" 22nd July 1999
(BSMA presented evidence to this committee)

"The actual behaviour of building societies is sometimes criticised.  It is alleged they do not always behave as mutuals should do, and that they have deviated from their true mutuality..." (The Issue of Corporate Governance).

"...mutuals are more like rather nasty secret societies..." (Sir Teddy Taylor MP).  

"We have no vested interest in disadvantaging consumers or maximising profits". (Directors' Memorandum from Nationwide Building Society).

"Nationwide is a very modern and successful organisation which values its democratic constitution". (Directors' Memorandum from Nationwide Building Society).

"Building Societies value their democratic process but if democracy is abused by "bending" the rules it can fall into disrepute". (Directors' Memorandum from Nationwide Building Society).

"Is there a case for having members' representatives on the board?" (Committee Chairman).   "Very much so". (Brian Davis - Chief Executive - Nationwide Building Society).

"It might be a nice situation where part of the board had to be member-nominated directors ...". (Brian Davis - Chief Executive - Nationwide Building Society).

(Back to West Bromwich)

(Back to Nationwide)

Go Back Upstairs

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