Don't hang around after the windfall

During the coming week, almost 12 million members of the Woolwich and Halifax will discover exactly what the abandonment of their societies' mutual status will bring them.

In the case of the Woolwich, precise details will be known tomorrow. It is likely that the minimum value of free shares paid when and if eligible members vote for a flotation will be pounds 800, and double this amount for those who are both savers and mortgage borrowers.

In addition, some pounds 1.5bn worth of free shares will be handed out in a separate distribution based on the savings levels in members' accounts.

Halifax members may not hear until the end of the week. However, they are likely to get a similar-sized bribe.

In such circumstances, it would be senseless to argue that the principles of mutuality outweigh the hefty benefits flowing from a simple tick on a form and a swift trip to the postbox.

After all, so the argument goes, compared to a large fistful of free shares, the benefits of common building society ownership are mostly intangible and not worth defending.

This view has been so regularly repeated by so many of my colleagues in the national press that it seems almost churlish to challenge it.

Yet we should. As the Which? survey discussed on page 11 shows, it has always been possible for some members to get a far better deal than has ever been available from banks and bigger societies.

The trick has been to avoid, where necessary, the Halifax, Woolwich and Alliance & Leicesters of this world, looking instead to the National Counties, Dunfermline, Coventry and Yorkshire building societies, or specialist insurers.

Moreover, the survey demonstrates that shopping around pays dividends - pounds 6,300 over five years, for a family with typical financial commitments.

Which brings us to the big question of 1997: given that the flotation votes are foregone conclusions, what will you do when you receive the bonanza?

The societies that are floating hope you will behave in the typical manner - stay put with them through inertia.

The hassle of changing bank accounts, diverting standing orders and direct debits, shopping around for new buildings and contents cover, arranging new mortgages and other loans, and all the rest sometimes appears to deliver very little reward.

That may be so for each individual change you make. But adding an average of pounds 100 to your monthly pay packet is no mean pay-off for obtaining and acting on a few financial quotes. When was the last time your pay rise came to that much?

AFTER touting the benefits of shopping around, it may seem contradictory that this column should then advise you to be careful when it comes to prospective PEP purchases.

As our article on page 12 reveals, "execution-only" brokers are poised to clean up in the next few months by offering supposedly unbeatable deals on personal equity plans.

So what is there to worry about? If you are a sophisticated investor and the PEP you want is the one on sale through a discount broker - nothing.

You may, however, find that the PEP you want is not available, usually because it does not pay trail commission to the broker, and you are steered instead to a "similar" investment.

If you are not sure what kind of PEP you really want, whether a "similar" PEP is just that, or even whether a PEP is the right investment for you, talk to an independent financial adviser. By all means negotiate a discount. But remember, shopping around also means being prudent with your money, not just chucking it at the first investment that moves.

q Steve Lodge is away.