Sam Dunn: Nationwide keeps the mutual flame burning

It will be a still bigger target for those who want to see it stumble

As a thorn in the side of rivals, it has had no peers.

Nationwide building society has splendid form for irritating and harassing high-street banks and lenders to expose their poor and often sharp practices.

Its knack of garnering publicity for consumer-friendly campaigns, and its series of sardonic TV ads portraying its competitors as money-grubbing scoundrels, has helped it win countless new customers.

The most recent successes include highlighting the extra costs of using a rival's credit or debit card overseas. It has also shown how most lenders prefer to order repayments on plastic in such a way that your more expensive debt remains on your card for longer - fattening their pockets at your expense.

In principle, last week's announcement that Nationwide is to merge with Portman will mean even more of this sterling work.

The enlarged group will, by September 2007, have assets worth £150bn under its control, making it the UK's second-largest mortgage lender and savings provider. And, you would think, it won't throw all that extra weight around just to undermine its rivals.

As befits the nature and purpose of a mutual, Nationwide will - or should - be hell-bent on using the economies of scale secured by swallowing Portman to offer better rates on mortgages, personal loans and savings, as well as to reduce its fees and penalties.

As the biggest building society in the land, it was already under scrutiny from rivals keen to find chinks in its armour as a consumer champion and standard bearer for mutuality.

Now it will be an even bigger target for those who want to see it stumble.

No one could argue that mutuals are bad for competition, given their alternative approach to profits - returning money to customers, or "members", instead of shareholders.

Yet the warm glow of mutuality has been fading for many years.

Among others, the Halifax and Northern Rock have waved the white flag and listed on the London Stock Exchange to raise money for investment and growth. And earlier this year, insurer Standard Life gave up the ghost, arguing that it could no longer compete as a major player unless it became a plc. In all these cases, it was decided that a brighter future would be mapped out with shareholders in the place of mutuality.

The new Nationwide, in its role as a "mega-mutual", will inevitably provoke fresh questions over whether its members might be better served long term if the company were a plc. Many might also be tempted by the one-off cash bonus from demutualisation.

But as long as Nationwide continues to demonstrate its mastery of mutuality - by increasing its profits and then passing them on to customers - then its crown as consumer champion is unlikely to be dislodged. And mutuality won't feel the chill.

s.dunn@independent.co.uk