Right of Reply: Michael Hardern

The founder of Members for Conversion responds to Andreas Whittam Smith

ANDREAS WHITTAM Smith's argument ("Mutual societies are going, just when we need them most", 18 January), that Friendly Societies and Building Societies can provide us with significant advantages rests on a myth.

It's all about money. Mutuality gives three quarters of its members just pounds 10 a year or less. Conversion into public companies gives a one-off windfall of around pounds 2,000.

Mutuality has served its time, and needs to make way for the innovation and competition of the plc. It has inherited its wealth and is showering its beneficence on those who actually need it least, frequently those who are not even members of the mutual society - that is, those who can afford to raise the largest mortgages.

The claim that mutuals don't rip off their customers is laughable. They invented the idea of luring unsophisticated investors through the door with high interest rates on selected accounts, and then dropping those rates as soon as their attention was turned. They were repossessing homes with the best of them during the property crash. It is only as a result of the conversion campaign that they have discovered the advantages of mutuality.

Mutuality is a wonderful idea - don't get me wrong - where people help others less fortunate than themselves. But it has been hijacked, and small savers are being denied a windfall and are subsidising the mortgages or pensions of people much better off.

Capital and invention are what produce advantage. Mutuality has stagnated. Unless it can deliver substantial bonuses it won't survive - or deserve to. The democratic deficit in the building societies beggars belief.

Jam today, please!