Money: fear of finance

If Scottish Amicable policyholders succumb to the blandishments of Abbey National, which yesterday announced it is prepared to pay up to pounds 1.4bn for the company, their decision will be down to two factors.

Let me declare an interest at the outset. I am one of the million-strong army of policyholders who will be considering my vote. As I see it, the first point to consider is ScotAm's performance. The plain fact is that over the past five years, the company's policyholders have been short- changed.

The tables we show in our Question and Answer piece on the Amicable tell the story. In that space of time, performance has slipped dramatically. The second factor is greed on the part of ScotAm's bosses. Having managed our funds in a shambolic way, the directors are in effect offering us bonuses of a few hundred pounds each, on average.

For that, we must hand over 20 per cent of future profits and lose any effective control of the company we supposedly own until it is floated in three to five years.

Yet far from apologising to us for their mismanagement of our funds, our "employees" (for that is what they are) have lined up share incentive packages that will give them up to pounds 14.4m in shares if returns hit the targets they have set.

The justification for this to ScotAm bosses is that it is all part of creating the new "commercial culture" needed to drag a sleepy office, founded in 1826, into the 21st century.

In other words, the same directors who have been with the company for years - in some cases, decades - want loadsadosh for pulling us out of the mire they put us into.

Despite the anger felt by policyholders, it would be wrong to fall into the arms of Abbey National until we know what they are proposing.

Details of the Abbey National offer, what little there are so far, are set out more fully in today's business pages. More information will be known in the next few days. Next week, Scottish Amicable is hoping to mail out its own proposals to policyholders fleshing out its announcement two weeks ago.

Until the position becomes clearer, however, do not vote for ScotAm's proposals either.

Meanwhile, it strikes me, as it will no doubts have struck many thousands of other policyholders, that despite their new-found modernising zeal there is very little Scottish Amicable's directors have to learn in at least one area - how to put their snouts in the trough.

From one mutual company to an ex-mutual. Elsewhere on these pages, we detail the experience of a would-be borrower with Cheltenham & Gloucester, the mortgage arm of Lloyds Bank. C&G is allegedly able to offer lower rates because of the high number of people whose pounds 495 arrangement fees are lost when they fail to complete on a purchase. There is an irony here, in that when C&G was bought by Lloyds, it promised to undercut other lenders' mortgages by at least 0.25 per cent. Earlier this week, it abandoned the pledge, raising loans to a mere 0.03 per cent shy of its main competitors. Those who are about to vote for their own societies to float on the stock market might want to bear this in mind.