Once you have the free cash or shares, dump Birmingham Midshires

It was possibly the world's worst-kept secret. The takeover announced this week of Birmingham Midshires by Royal Bank of Scotland, which will earn its 1 million-odd members pounds 600m in cash and shares, had been widely forecast by just about everyone. So widely expected was it that Midshires managed to add almost 300,000 new members within the space of a few months.

Michael Jackson, the society's chief executive, said he did not like the term "carpetbagger" to describe these new clients. He should have told his press office, which has described them as such since the beginning of the year.

But maybe he has a point. All these people may have been joining a relatively ordinary Wolverhampton-based society purely for the pleasure of sinking at least pounds 2,500 into one of its less-than-scintillating members' accounts.

These people will be in the same queue as loyal Birmingham Midshires members when Royal Bank of Scotland hands out cash and shares next year worth pounds 600 each, the price of taking over the society.

Mr Jackson argues there will be no dilution of any entitlement for older members because the high price he negotiated for the society was partly due to this sudden influx of clients.

The price rose because the members will be part of RBS and Midshires' "client bank", a gigantic herd waiting passively to have new financial products "cross-sold" to them by their owners.

Of course, if RBS is prepared to pay for them, it must clearly "own" its clients. This ownership coincides with another discovery by Mr Jackson that members of his society are clamouring for the financial products he and his chums at RBS are planning to sell them.

Hold on, I hear you asking: surely the free shares and cash will outweigh this crass commercialism? Well, take a Birmingham Midshires borrower, repaying a pounds 50,000 home loan at the society's variable rate.

Over the past 12 months, the borrower would have repaid about pounds 250 more than someone with the same loan at Nationwide. Nationwide also sells products, including pensions, that are among the most competitive around.

Arguing that Birmingham Midshires has elevated "good service" in place of competitive pricing will cut no ice in its Black Country heartland.

As with the other converting societies, my advice is the same. Once you have the cash or shares, become the sheep that roared, dump Midshires, and move your account elsewhere.

From next month, we will start running our popular free financial makeover series once more, curtailed for lack of space over the summer. To receive free advice worth hundreds of pounds from one of the UK's top financial advisers, write to: Nic Cicutti, Free Financial Makeover, The Independent, 1 Canada Square, Canary Wharf, London E14 5DL. You must be prepared for your name and picture to appear in the paper.

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