Profile: The mould-breaker: Cheltenham & Gloucester's Andrew Longhurst is a believer in treading on toes, writes William Kay

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ANDREW LONGHURST generates stronger feelings than anyone else in the building society movement. Indeed, the very word 'movement' gets up his nose as a symbol of the stuffy attitudes that still pervade the humdrum business of financing home purchase.

'I don't fall into the standard mould of the building society chief executive, talking about the building society movement and mutuality,' he snorted last week.

His rivals grudgingly admit that he has much to snort about. After spending the last 10 years making a regiment of enemies among his peers, he went for a bigger target 10 days ago: Her Majesty's Treasury no less.

On 7 July the Treasury's Department of National Savings issued a First Option Bond carrying an interest rate of 10.34 per cent before tax. It was a direct threat to savings accounts offered by many building societies. Apart from carrying a competitive interest rate, the minimum deposit is only pounds 1,000 and the bond could be cashed without penalty at any time after a year.

First Option duly attracted pounds 112m in its first nine days. Most of that was drawn from the societies, which had already suffered a pounds 315m outflow in June. Typically, none of them complained publicly. They all watched to see who would move first. Cheltenham & Gloucester, the country's sixth biggest society, where Longhurst has been in command as chief executive for a decade, was the form horse.

Longhurst obliged. On Friday, 17 July he announced that C&G was raising its lending rate by 0.24 per cent to 10.99 per cent. The rate to savers rose by 0.2 per cent. That gave the excuse the others needed to say that they, too, would be raising their rates. The Government was faced with the prospect of being blamed for an increase in the cost of mortgages that would delay even longer the recovery of the housing market.

Only three days later the Treasury backed down. It cut the rate on its First Option Bond by 0.67 per cent to 9.67 per cent, the first time since 1984 that it had tacitly admitted to such a misjudgement.

Other societies confined themselves to congratulating the Treasury on its perspicacity. There were no bouquets for the sharp-suited, sharp-elbowed Longhurst. Indeed, the senior executive of one of the biggest societies declined to contribute to this profile because most of his remarks were expletives. 'I am used to putting noses out of joint,' Longhurst sighed. 'Everyone likes to be loved, but I am more interested in doing the right thing for C&G and our customers.'

The main reason Longhurst is such a loner is that he did not join C&G until he was 28. Many in the industry enter straight from school. He was born in Epsom, Surrey, 11 days before the outbreak of the Second World War. His father was the national sales manager at Colgate-Palmolive, the American toothpaste and soaps group.

He attended Glyn Grammar School at Epsom, where his strengths were mathematics and languages. He wanted to go to Oxbridge but was barred because he lacked Latin, and he did not want to go to London University because he would have had to commute. Instead he chose to read mathematics and statistics at Nottingham University. His three children, Helen, 25, Catherine, 23, and Richard, 22, are all mathematicians.

Faced with the prospects of becoming a teacher or an actuary, Longhurst opted for the then embryonic computer industry and began his career as a programmer for Ferranti. After a few years he moved to English Electric, which was subsequently taken over by GEC. It was this move that brought Longhurst into contact with the financial services industry.

'They had just sold National & Grindlays Bank its first computer,' he recalled, 'and I helped them install it.' That led to other consultancy jobs in the City, notably with Commercial Union and Midland Bank. But Longhurst ultimately found it frustrating to be advising from the outside, so he joined Cheltenham & Gloucester as a data processing manager, helping to install the society's first computer system. 'They gave me a blank sheet of paper, a rubber and a pencil and told me to get on with it,' said Longhurst.

He thought he would be with C&G for that project only, but instead he was made administration manager and then deputy general manager responsible for branches and marketing. In 1982 he became chief executive.

'I don't plan my career,' he said, in an accent that has acquired a distinct West Country burr. 'What I have always done is the job I'm doing now, to the best of my ability. I have never worried about tomorrow. But if you do your own job well, people tend to give you another one.'

Once in charge at C&G he set about driving it forward, building its assets from less than pounds 2bn to nearly pounds 15bn and taking the society from 14th to sixth in the national league table. It now has more than 200 branches serving 1.2 million investors and 300,000 borrowers. Longhurst's twin strategy has been to keep costs down while grabbing headlines with innovations.

As a proportion of assets, C&G's expenses are about half those of other big societies - helped by ruses such as replying to enquiries on the back of the original letters.

He began with a bang, marking his arrival at the top by launching the Cheltenham Gold Account. This was the first to introduce a premium interest rate for higher deposits. 'That effectively broke the building society cartel on interest rates,' Longhurst claimed. 'It put us on the map.'

He killed another sacred cow when he severed C&G's agency links with solicitors, accountants and other firms. Under this cosy arrangement the agents received commission in return for bringing new accounts to the society. C&G was also the first to offer clients a share-dealing facility and a unit trust. But like its modest foray into estate agency, these have been scrapped either because they did not work or fell foul of the regulatory authorities.

One of these initiatives has come badly unstuck. In 1989 C&G agreed to fund a home income plan by Aylesbury Associates, an approved financial adviser. The idea was to enable older homeowners to use the value of their properties to give them an income. But many lost money when the housing market collapsed and interest rates fell.

Longhurst found himself in the position most businessmen fear: speaking into a microphone thrust under his nose by the relentless Roger Cook of The Cook Report fame. After an hour's grilling, Longhurst lost patience and walked off camera - giving Cook the shot he wanted.

'It wasn't our scheme,' Longhurst said, 'but we have stopped charging interest on these mortgages and we are topping up payments under the investors' compensation scheme. We are trying very hard to avoid getting involved in these sorts of schemes in future.'

He admits that C&G will find it hard to claw its way much further up the building society ladder, so he is looking at the possibility of mergers with other big societies. 'We are coming to the stage where there is an economic imperative for societies to merge,' he argued. 'I hope C&G will be part of that.' Many tip Longhurst to follow Abbey National by floating C&G shares on the stock market. He certainly envies Abbey's greater ability to raise money.

What then? He professes not to know, insisting that his main aim is to get the best deal for his customers. If that also happens to be good for Andrew Longhurst, so much the better.

He has certainly shaken up the sheltered UK mortgage market - whether others like it or not. And if he does not end up at the top of the pile after the expected round of mergers, Longhurst may decide to seek a new challenge.

As he loves saying: 'Nothing is forever.'

(Photograph omitted)