Let’s not beat around the mulberry bush. Nationwide Building Society is a force for good in the murky world of personal finance. It is more consumer-centric than its banking rivals and believes in delivering customer service par excellence. Virtues sadly lacking across swathes of the financial world.
It has even opened a new branch this year – Glastonbury in Somerset – an unlikely but welcome step given most banks are retreating from the High Street at a great gallop.
Also, unlike rivals – including the State-owned Royal Bank of Scotland – it does not believe that in order to run an efficient financial institution you have to outsource key parts of your business to distant parts of the globe.
It is even handing out £500 a year to any of its 15 million ‘members’ – savers and borrowers – who recommend five friends to take out a current account with the society. A nice little earner as Arthur Daley would say.
Yes, Nationwide is terribly British, awfully reliable and much loved by most of its customers. A good financial business of which we need more.
Yet, like most of us, it is not perfect. Sometimes it does things that seem terribly un-Nationwide and makes you wonder whether the cuddly mutual is about to change its spots. God forbid.
Certainly its decision to drop a charitable scheme designed to encourage customers to vote ahead of its annual general meeting on July 20 (to be held in a buoyant, booming Birmingham) is a strange one.
In recent years, most building societies have tried their hardest to make members feel part of the business they ultimately own a slice of. Some have even provided loyal customers with special savings deals as a thank you for their prolonged custom – although given savings rates are so threadbare, ‘special’ is probably being too kind.
But it is in the governance of their businesses where they have engaged the most, encouraging members to attend consumer forums so they can give the society useful feedback on how they are doing.
They have also tried to get as many members as possible to attend the annual general meeting (sandwiches and tea are a given and, if you are lucky, a local choir or music society may turn up to provide post-AGM entertainment).
The AGM provides an opportunity for customers to meet key directors, ask questions and if necessary let off a little steam. It also allows them to vote on key resolutions such as the directors’ remuneration – often a contentious area – and the reappointment of directors and expensive auditors.
If they cannot turn up, then members are asked at the very least to vote on these key resolutions ahead of the AGM, which they can do online, by post or at the local branch.
To persuade members to vote, most building societies will make a charitable donation per vote cast. This year, for example, Coventry donated 10p per vote cast to The Royal British Legion.
But Nationwide has inexplicably stopped such payments. At last year’s AGM, it raised £205,000 for Macmillan Cancer Support through agreeing to make a donation for every vote cast. But this year it is paying the square root of nothing. A number of people – including ex-employees – have contacted me in recent days to express their disappointment.
Is Nationwide’s move a retrograde one? Or are we moaning about split hairs? I am in the first camp. Why?
First, I think it is important for customers of building societies to take an interest in the business they have given their money to – or borrowed money off – to fund a house purchase. If a charitable donation encourages such engagement, then it has to be a good thing. By removing such an incentive, Nationwide is discouraging customer participation.
Secondly, building societies are unlike most other financial institutions. They are liked, not loathed. More intimate rather than mechanistic. They care. These are characteristics they should build on. Nationwide’s axing of its charitable donation is symptomatic of a business disassociating itself from its customers. Not a good step.
Finally, and most importantly, it is absolutely essential that members should be encouraged to scrutinise those who look after their finances – and if necessary hold them to account. Especially when the boss of that institution (Nationwide’s chief executive Joe Garner) received remuneration in the year to April 2017 of just short of £3.4 million. A staggering amount on any level.
Is Nationwide’s decision to no longer make a charitable donation for votes cast at the AGM a result of it not wishing to draw attention to boardroom largesse (between them, the society’s five executive directors received £6.4 million)?
Me thinks so. Naughty naughty Nationwide. Greedy greedy Mr Garner.
Jeff Prestridge is Personal Finance Editor of The Mail on Sunday
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