David Prosser: Nationwide heading back into the pack

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Outlook What is going on at Nationwide Building Society? The largest of the mutuals, by some distance, has always made a virtue of its non-bank status, with a string of customer-friendly policies designed to position it at the cuddly end of the financial services market. Yet over the past two years, many of these policies have been dismantled.

The latest is the society's announce-ment this week that it will no longer allow customers to withdraw less than £100 over the counter in branches offering cash machine service – on the grounds serving them takes a disproportionate amount of time and leaves others queuing unnecessarily.

It sounds like a tiny thing, but many older Nationwide customers are up in arms. And the change follows U-turns such as a move away from fair mortgage pricing and free cash withdrawals from ATMs all over the world. Many of the services the building society once used to differentiate itself from its banking competitors are disappearing.

It seems a strange time to stop being aggressively consumerist. The financial services industry's customers are desperate to do business with institutions not tarred by the credit crisis brush – banks like the Co-op are seeing big increases in account openings – and even the main political parties are talking up the merits of mutuality. Labour's election manifesto this week suggested Northern Rock might be returned to the mutual sector.

Nationwide can no doubt make a good case for each of the changes it has made. But if the sum total is to damage the perception that Britain's biggest building society is not simply operating as a bank under a different name, it will give away a huge competitive advantage.

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