Personal Finance: Carpetbaggers mobilise on the internet

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The Independent Online
THE building society carpetbaggers are back. And this time they are talking tactics on the internet. Several websites already offer tips and message board discussions for those intent on forcing building societies to pay a windfall to members. A new site, Members First, was set up last week, stating that its aim was to "give control of building societies back to the members".

This mass mobilisation of cash-hungry members could prove the biggest threat yet to the beleaguered building society movement. A society member has to have 50 backers before he or she can put a resolution to the board that the society should vote on conversion - meaning it becomes a bank or is taken over. Either way, the ex-society has to pay out cash or shares to members as compensation for losing their ownership stake.

Pam O'Keeffe, at The Building Societies Association, says: "What concerns us about the internet is the ease of communication and how much easier it is for them to get 50 members together. In the age of e-mail communication, it has to be questioned whether that threshold is high enough."

The big societies are already under renewed pressure. Last week, six of them met to discuss ways to fight off the unwanted attention of Michael Hardern, "king of the carpetbaggers". Last year Mr Hardern forced the Nationwide to poll its members on putting itself up for sale. He was narrowly defeated. Now he has turned his attention to the Britannia, Yorkshire, Skipton, Leeds & Holbeck, and Chelsea and Portman.

In a separate move, the Bradford & Bingley building society has already committed itself to polling its members on staying mutual. A member, Stephen Major, collected 50 backers and forced the 2.5million-member society to take out adverts in the national press announcing that a vote would take place as part of the AGM in April.

The B&B is strongly opposed to conversion but its hands are tied. "There is no legal way not to put this to the members," a spokesman said.

Meanwhile, the B&B and the Portman have closed their doors to new savers. Others could follow if they are swamped with would-be carpetbaggers in the next few weeks.

The internet activists distance themselves from Mr Hardern, believing that he damages their cause. He may well fail in his current attempts to disrupt the six societies, but even if he goes away, there will be hundreds of others to take his place.

The Government last week refused to offer any extra protection to mutual societies. All they can do is mount a massive campaign to persuade their members of the long-term benefits of mortgage rates that are lower than those offered by most banks. Because there are no shareholders, mutuals can plough their profits back into better deals for members.