Those holier-than-thou mutuals made to blush

Personal finance

Those building societies not dangling windfalls would have us believe that they are oh-so customer-friendly and they give us a better deal than the ones that want to be nasty, money-grabbing banks.

How embarrassing, then, that past examples of naughtiness should continue to emerge. Last week came the revelation that 2,000 people sold endowment mortgages by the Nationwide in recent years bought policies without knowing they could be landed with tax bills of thousands of pounds each when the endowment matured.

These "Freedom" endowments were sold as part of a tie-up with Guardian, the insurance company. But it seems that Nationwide's sales staff failed to tell many borrowers that if they were higher-rate taxpayers when the policy paid out, they would face further tax if they took out this particular deal. The proceeds from most endowments are tax-free.

A potential compensation bill totalling millions of pounds is on the cards to ensure that affected borrowers don't lose out as a result of the sloppy advice. Nationwide members - the owners of the society - can at least be thankful it is Guardian that will pick up the tab. But it still begs the question why the society didn't give better advice.

Nor do you have to look far to find dubious practices continuing among those societies purportedly in the mutual camp.

Remember those hard-sold accounts with big rates in which the interest flopped once they'd got your money? They're still around. Last month Birmingham Midshires building societyslashed the rates on its popular First Class postal account by a full percentage point. That's more of a cut than any mortgage borrower has seen since the Chancellor's latest base rate shaving, and leaves savers with pounds 1,000 earning a pitiful 2 per cent (before tax). Of course if, as rumoured, there's a big windfall on the way for members, then perhaps we shouldn't niggle too much. In the meantime, the society continues to mouth platitudes about its commitment to giving members value.

The Britannia, by comparison, offers savers and borrowers cash bonuses without selling out or becoming a bank. It is signing up existing customers for its Members Loyalty Bonus Scheme, using a glossy mailshot featuring Wallace & Gromit-style characters, and built around the idea of what members might do with their bonus. One character holds a cheque for a "stereophonic gramophone", another for "sensible shoes". The society claims the average bonus will be pounds 40. But don't be fooled - most members' bonuses will be far less.Most savers, who are already labouring under piddling deposit rates, are likely to get less than pounds 20. Furthermore, the bonus registration form seems as much an exercise in finding out what other products customers can be sold.

AS WELL as being boring, pensions are also highly complex. Which is why the Prudential's plea to the Government this week to simplify the system - exclusively trailed in this paper - can only be welcome. "There is no logical reason why a pension needs to be more complex than a building society account," said a Pru executive. Quite. To which could be added that, given the importance of encouraging people to have a pension, there is every reason for a pension to be at least as simple as a deposit account.

It would be good to see the Pru - as the UK's largest life insurer and seller of personal pension plans - setting an example. But I have seen little evidence of this (nor, indeed, from many pension providers). Clarity begins at home.

Johnny Handle, Northumberland, Ted Relph, President of Lakeland Dialect Society, and Sid Calderbank, Lancashire, founder of the National Dialect Day
newsMeet the enthusiasts determined to stop them dying out
The data shows that the number of “unlawfully” large infant classes has doubled in the last 12 months alone
i100Mike Stuchbery, a teacher in Great Yarmouth, said he received abuse
Arts and Entertainment
The starship in Star Wars: The Force Awakens
filmsThe first glimpse of JJ Abrams' new film has been released online
Rio Ferdinand returns for QPR
sportRio Ferdinand returns from his three-game suspension today
The Speaker of the House will takes his turn as guest editor of the Today programme
arts + ents
ebooksNow available in paperback
Arts and Entertainment
St Peter’s Seminary in Cardross. Argyll, has remained derelict for more than 25 years
arts + ents

Watch the spoof Thanksgiving segment filmed for Live!
Billy Twelvetrees will start for England against Australia tomorrow with Owen Farrell dropping to the bench
rugbyEngland need a victory against Australia today
Arts and Entertainment
The cover of The Guest Cat – expect to see it everywhere
Tyson Fury poses outside the Imperial War Museum in south London ahead of his fight against Dereck Chisora
boxingAll British heavyweight clash gets underway on Saturday night
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Austen Lloyd: Company Secretary

Excellent Package: Austen Lloyd: EAST ANGLIA - SENIOR SOLICITOR LEVEL ROLE** -...

Citifocus Ltd: German Speaking Client Specialist

£Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...

Citifocus Ltd: Performance & Risk Oversight

£Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...

h2 Recruit Ltd: Sales Director - SaaS (SME/Channel) - £140,000 OTE

£90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...

Day In a Page

Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

Christmas Appeal

Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

Is it always right to try to prolong life?

Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

What does it take for women to get to the top?

Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

Knitting pretty: British Christmas Jumpers

Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
French chefs have launched a campaign to end violence in kitchens - should British restaurants follow suit?

French chefs campaign against bullying

A group of top chefs signed a manifesto against violence in kitchens following the sacking of a chef at a Paris restaurant for scalding his kitchen assistant with a white-hot spoon
Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

Just what you need on a New Year hangover...

Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
Cuba set to stage its first US musical in 50 years

Cuba to stage first US musical in 50 years

Claire Allfree finds out if the new production of Rent will hit the right note in Havana
Christmas 2014: 10 best educational toys

Learn and play: 10 best educational toys

Of course you want them to have fun, but even better if they can learn at the same time
Paul Scholes column: I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season

Paul Scholes column

I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
Lewis Moody column: Stuart Lancaster has made all the right calls – now England must deliver

Lewis Moody: Lancaster has made all the right calls – now England must deliver

So what must the red-rose do differently? They have to take the points on offer 
Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game