Julian Knight: We need a little mutual assistance here
Sunday 08 May 2011
The building societies had their annual shindig in Birmingham last week and you would think that their mood would be upbeat.
After all, surely this is the time for the mutuality concept; with so much continued disillusionment with the banks and bankers – who would surely even lose an election to a Lib Dem councillor.
But not a bit of it, the building-society sector is facing fresh challenges, in their own way as great as the financial crisis of 2008. A wall of regulation is heading the sector's way – particularly relating to mortgages – which is going to add hugely to the societies' costs and make it even more difficult for small and medium size societies to obtain funding from the money markets.
Also, when interest rates start to rise, I can see a dash for fixed-rate deals, and if the societies can't access the money markets then they won't be able to offer the deals that are necessary to retain market share. The upshot could be that small and medium-sized societies wither on the vine, and the more precarious their lending books look the more likely they will be swallowed up by their larger brethren. In the 1990s and 2000s, the risk to the diversity of the mutual sector came from the carpetbaggers and the lure of the stock market. Now, it comes from mergers. Just when choice and localism should be something to be nurtured in our financial sector, they are poised to come under attack.
We've already had a host of mergers – the latest proposed one between the Yorkshire and the Norwich & Peterborough building societies – and more will inevitably follow. I can honestly see a time when we have a dozen or fewer building societies in this country, and we will sadly lose jobs and diversity.
It's ironic that a financial crisis brought about by the banks is likely to have such a major, long-lasting impact on building societies. When the banks do well, the carpetbaggers want the societies to convert; when they do badly, they queer the pitch for the societies to such an extent that merger is the only way for some.
The mutual sector is in desperate need of a fill-up. One suggestion from Yorkshire Building Society's chief, Iain Cornish, is for Northern Rock, once it has paid back taxpayer loans, to be remutualised. At a stroke, the mutual sector will have a major new player with a strong regional base and, hopefully, a very different ethos from the last incarnation of the Rock – remember the 125 per cent mortgage? Mr Cornish is backing a Commons Early Day Motion to this effect, signed by more than 100 MPs.
This motion keys into the coalition agreement which states that promoting mutuality is a major part of creating a more competitive banking industry. The time of the small and medium-sized mutual may be passing – which is sad for loyal customers and staff – but the concept of a financial institution owned by its customers rather than shareholders is one which mustn't be allowed to perish.
A lot of building societies have been badly run in the past (just like the banks) but we need a buoyant mutual sector. However, the concept needs a bit of backing and what better way than remutualising the Rock?
Justice over PPI is at hand
Maybe it's the fact that the taxpayer is a major shareholder, or there is a new chief at Lloyds wanting to look like the new broom, but the decision by the banking giant to finally drop its fight against payment protection insurance (PPI) compensation is a massive boost to millions of wronged consumers.
The British Bankers' Association still has a few days in which to lodge an appeal against the High Court's decision that compensation is due, and no doubt there will still be some hawks wanting to fight on. However, without Lloyds, with its 35 per cent market share, surely the seemingly endless battle for justice is nearly over? As I've stated previously in this column, the banks' PPI case is far less robust than the one they famously won relating to bank charges in 2009. In short, they don't have a leg to stand on, and, with Lloyds' decision, the others should see sense at last.
One concern I have, though, is that the compensation that the banks are being ordered to pay to individuals (which may top £10bn across the industry if what Lloyds has set aside for PPI mis-selling claims is anything to go by) may not be enough to cover the real losses suffered by some individuals. I had an email the other day from a PPI victim who had been signed up to the overpriced, useless insurance without asking for it on a credit card (and such an act could be deemed criminal fraud in any other walk of life). He has received compensation, plus interest at 8 per cent, but he was paying interest on his card at 19 per cent, and this included the PPI premiums. The banks should also have to return any interest they charged, rather than some arbitrary lower figure.
As for RBS chief Stephen Hester's warning, issued on Friday, that all this will have a material effect on his and other banks' bottom lines, I have one word in response – tough.
Bargain Hunter: Nimber looks to deliver savings and profit as it turns us into a nation of couriers
10 tips for taking out a personal loan
Women born in 1950s facing severe financial hardship over pensions could have fates changed by Ros Altmann - should she choose to help
Five Questions On: GB Energy's new tariff
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
- 1 California man brutally beat 82-year-old Sikh grandfather he mistook for 'one of those people'
- 3 Charles Kennedy 'had better judgement drunk than many sober politicians' says Ian Hislop
- 5 We have six months to save the world, says leading economist
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination
Migrants in Kos: Photos show real tragedy after Brits abroad complain of 'awkward' holidays
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
Michael Gove determined to scrap the Human Rights Act – even if Scotland retains it
Threat to scrap Human Rights Act could see UK follow Nazi example, warns UN official
Church of England 'one generation away from extinction' after dramatic loss of followers
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...
£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...
£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...
£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...
Day In a Page
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
This four-bedroom home offers a vaulted ceiling in a breakfast room that's ideal for summer entertaining with doors that open to the patio and garden.
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool