John Willcock: personal finance column

`We may come to regret the passing of the mutuals for their competition'
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WHEN WE come to look back on the gradual death of the British building society movement at the hands of the carpetbaggers, it is doubtful we will feel particularly proud of ourselves.

Hundreds of years of savings, totalling more than pounds 35bn, built up by generations of ordinary people to fund affordable homes, has disappeared in a 10-year windfall mania.

Despite this week's excitement over Internet carpetbaggers petitioning to convert three of the last surviving societies - the Skipton, the Portman and the Chelsea - it looks like we are reaching the end of the demutualisation mania. There simply aren't many mutuals left to convert.

What a contrast to the US. There, private investors vie with each other to spot the next Internet growth stock, and collectively pile billions into building the economy of the future. Here, we're more interested in grabbing a one-off payment which will never recur. And yet, however economically meaningless carpetbagging is, it's almost impossible to resist.

My eyes were irresistably drawn to a free newsletter published this week by Hargreaves Lansdown, financial advisers in Bristol, called Carpetbaggers Guide To The Universe. It supplies every piece of information the saver in search of a windfall could wish for - what societies have converted, which are coming next, what's the minimum investment to qualify for a payout, contact details galore.

At the back of the newsletter, one of the firm's proprietors, Peter Hargreaves, says the demutualisation process has "given more momentum to the creation of a savings culture than any other single event in UK history".

This is because people who receive a capital sum of whatever type - windfall, legacy and so on - tend to hang on to it rather than spend it, he says. So the pounds 35bn hasn't all gone on new cars and holidays in the Dordogne.

Mr Hargreaves says demutualisations are "inevitable", partly because building society managements do well out of them. "We have not yet seen a demutualisation whereby the management have not negotiated unbelievably attractive share option schemes in the new public company. In 10 years it is extremely unlikely there will be anything remotely like a mutual company left in the UK."

Mutuals have often tended to provide good value for money for their customers, since they do not have to make annual dividend payments to shareholders.

Currently this downward pressure on prices has been reinforced by the Internet. But for how long?

We may come to regret the passing of the mutuals as a source of competition for the banks and life companies.

You might as well profit from the remaining conversions, because they are going to happen anyway. You can get a free copy of the newsletter from Hargreaves Lansdown by ringing 0800 138 0456. Happy carpetbagging.

John Willcock is Personal Finance Editor of The Independent