The Ethical Face Of Banking & Financial Services (Nationwide Building Society)

Member Name: eyedo6789

Product:	Nationwide Building Society
Date:	25/03/09 (246 review reads)
Rating:

Advantages: There Is One Near You

Disadvantages: Beware Of The Big Bad Demutualizers

The Nationwide Building Society is the largest building society in the world. It recently merged with The Portman and is in discussions for a possible merger with The Derbyshire and The Cheshire Building Societies.

It is the only UK Building Society with full cheque clearing status. It is a "mutual" which means that it is operated purely for the benefit of its customers and in theory will therefore offer the maximum possible returns and services with the resources and funds that it has control over at any given time.

There are no shareholders and no dividends to pay out. Historically it has sometimes offered the best savings rates or borrowing rates to its customers but this is not always the case.

As an account holder with the Nationwide you have statutory voting rights and the right to attend the AGM (Annual General Meeting) and have a chance to listen to statements from the big wigs in the company and to take part in the question and answer session that follows. The 2009 AGM will take place on Thursday 16th July at the Birmingham International Convention Centre.

Each year every member (account holder) is asked, but not obligated, to elect or re-elect a board of directors and other key operating officers within the company.

There are always alternative candidates and sometimes the alternative ones are seeking election based on a manifesto of demutualization. So far voters have never voted in favour of demutualization.

Demutualization would mean the company being sold into private ownership. Because the company is technically owned by its account holders the proceeds of the sale into private hands (via The Stock Market) would be divided up amongst the account holders. This is commonly known as a windfall.

However, because of the trend of so many building societies being de-mutualized there used to be a huge number of people opening building society accounts with all of the mutualized ones in the hope that they would be de-mutualized therefore giving them a windfall. This strategy worked and many people were gaining £200 to £2000 a go from this. People who did this were known as "carpet baggers".

Of course carpetbaggers always used their votes to vote for de-mutualization and also actively sought to destabilize a building society's mutual status by whatever means possible. This included turning up at AGM's and causing disruption with difficult questions to the existing directors and by making claims of mismanagement and by making the point that mutual status building societies were not offering enough value to their account holders.
Often these claims were accurate albeit the driving motive behind them was to gain a cash windfall rather than for any kind of genuine altruistic reason.

To counter this disruption at AGM's many mutuals fought back tactically by choosing to hold their AGM's in remote locations at the end of narrow country lanes in deepest Wiltshire, Somerset or somewhere like that. This made it harder for "trouble makers" to attend.

The majority of mutuals eventually succumbed to the pressure for demutualization but those that are still mutual now have a different method of stopping carpet baggers.

This method takes the form of insisting that any new accounts opened have to have a signed declaration from the account holder that in the event that the Building Society is demutualised that any windfall received by the account holder will be donated to charity. This is known as "A Charitable Assignment". This has effectively killed carpet bagging as a practice stone dead.

It varies from building society to building society but if you opened your account before a certain date you will still receive a windfall if the company is demutualised.

The Nationwide today in my opinion and to the best of my knowledge is one of the most stable financial institutions in the U.K. It has been reported that its exposure to the U.S. lead sub prime mortgage debt crisis was substantially lower than that of many other banks and building societies and that it did not have any significant impact on either its balance sheet or its financial viability going forward.

It offers a wide range of products and services many of which are available in branch, by post, by telephone or on line.

Their main services are savings, mortgages, banking, personal loans, pensions, investments, credit cards, foreign exchange and insurance.

You can operate a personal bank account with them in the same way that you would with a bank. Business banking is not currently their strength and not as mature or wide ranging a product as you will get with High Street banks.

The personal banking is very good in my experience. I do most of mine on line with them and when I log in my bank account is integrated on to the same screen as my savings accounts allowing me to freely move funds between them.

You can do all of the usual things on line from your bank account like set up and amend direct debits, standing orders and bill payments.

Their range of savings accounts, cash Isas and bonds is very good but when it comes to more sophisticated investment products such as Equity and managed fund Isas or investment trusts the range is very small and it might be worth looking in the wider market as well.

The Nationwide's credit card is known to be the best or equal best in the market when it comes to using it abroad. It charges very fairly in this respect whereas most other credit card companies are excessively punitive if using them abroad.

I have always found customer service from the Nationwide to be excellent and that their ethos is based on always trying to please the customer and meet his/her needs in the best possible way. Even when the customer has made an error or is in the wrong they treat the customer with respect and professionalism.

The Nationwide is an excellent company run in the right way and is a bright shining light in the world of personal finance and banking.

Summary: There Are Very Few Great Companies Left, This Is One Of Them