Nationwide's self-righteousness has been exposed as a sham

Telegraph

4 days ago

Who said banking was boring? One glance at Nationwide's website and you might wonder if you were in the company of some crusading NGO on the cusp of saving the planet.
'We are not a bank, built to make money for shareholders. We are … a mutual, owned by and run for the benefit of our members', it proudly states.
'There's no one else quite like us.'
It surely doesn't need pointing out that if you're going to join the sanctimonious crowd and act like a paragon of virtue then you definitely need to walk the walk. Yet Nationwide is rapidly turning into a world-beater in hollow soundbites.
The Nationwide model is a simple one. The concept of democracy is absolutely core to mutual status – when it comes to major strategic moves or matters of genuine consequence, its 16 million members are supposed to have a say. Without that, it instantly loses its USP and becomes just another self-interested organisation out to make a quick profit at all costs.
Unfortunately, Nationwide's members are quickly learning that despite management endlessly shouting about its principled ways, this supposedly ethical approach appears increasingly to be built on flimsy foundations.
The latest example of Nationwide's readiness to ride roughshod over the will of its members comes in the form of what should have been a fairly routine board re-election vote at its annual general meeting. But it is in danger of spiralling into another embarrassing storm for the organisation.
Members – not unfairly – point out that of the 13 board members up for re-election, none of them have been nominated by them. They are also concerned that there aren't enough directors with the experience of running a mutual.
On the face of it, it is hardly a scandal to rival Watergate, but because the situation has been so poorly handled, Nationwide risks coming out of it terribly. It is also fundamental to what the mutual insists it stands for, so while it may seem largely inconsequential, it is another test of its claims to operate ethically.
In keeping with Nationwide's democratic values, members can put forward candidates if they obtain 250 endorsements. But one customer, James Sherwin-Smith, claims his nomination was blocked despite receiving 600 signatories. Nationwide disputes this - the number of valid nominations received fell 'substantially short of the threshold', it says.
But the word 'valid' sticks out like a sore thumb in that sentence. In the interests of full transparency, it needs to explain how many votes were invalidated and why, otherwise this whole farrago smacks of an organisation that continues to obfuscate whenever the threat of real scrutiny presents itself.
With all 13 directors up for re-election and not a single one of them nominated by members, one empathises entirely when Sherwin-Smith says: 'It's unclear to members where the representation for us is. It feels to us that the board is doing what the board wants, not what the members want.'
If a row over the re-election of directors was its only misdemeanour, Nationwide would be entitled to feel hard done by perhaps. Yet such episodes are starting to become the norm rather than the exception to the extent that it is beginning to look like it is not being run for the benefit of members.
This, after all, is a board currently trying to see off an entirely justified backlash over a bumper £7m pay award for chief executive Debbie Crosbie that wouldn't look out of place at some of the big investment banks.
It's certainly not out of kilter with what the bosses of Britain's high street banks get paid. However, as one bank chief privately points out, running a building society that essentially provides mortgages, current accounts and not much else, isn't nearly as complex as running a publicly listed financial institution with an investment banking arm or overseas operations.
So why is Crosbie being paid like she is? It is way more than her building society peers earn. Susan Allen, chief executive at Yorkshire Building Society, receives around £1.6m a year, while Steve Hughes, the boss of Coventry Building Society, took home £1.2m last year.
A big part of the reason is Nationwide's takeover of Virgin Money last year. According to senior independent director Tracey Graham, the deal 'significantly increased the size and scope' of the business, bringing 'additional operational complexity and demands of executive roles'.
Yet that somewhat conveniently overlooks the fact that there was serious opposition both from Virgin shareholders who complained they were the subject of a low-ball offer, and Nationwide members after they were denied a vote on the tie-up.
Instead of doing the courageous thing and putting it to a ballot, the two sides hid behind merger rules and archaic legislation they insisted prevented any such move.
Members were essentially being asked to take Crosbie and her team on their word. However, this was a regime whose credibility had suffered a serious knock when a Nationwide TV ad claiming it wasn't closing branches was banned on the grounds it was misleading.
With Nationwide boasting, 'you have a voice we want to hear', members are entitled to ask whether that only applies when it suits those at the top.