Latest news with #mutuals
The Guardian
20-07-2025
- Business
- The Guardian
Storm brews over Nationwide chief executive's pay package worth up to £7m
It has been a career-defining summer for Debbie Crosbie. Three years after taking over as the chief executive of Nationwide Building Society, the straight-talking Glaswegian has become a darling of the Labour government: awarded a damehood, namechecked in the chancellor's Mansion House speech and hailed for furthering a Labour party manifesto pledge to double the size of the mutuals sector. But outside Westminster's warm embrace, a storm has been brewing. A 43% increase to Crosbie's maximum pay package, worth up to £7m per year, is due to be rubber-stamped without a binding vote by members, effectively sidelining any opposition at Nationwide's annual shareholder meeting on Friday. It has prompted outrage among campaigners who say it is the latest sign that the 140-year-old building society is losing its way. Those critics believe Nationwide, which was founded in 1884 in south London as the Southern Co-operative Permanent Building Society, has deviated from its roots. Although owned by its members, it bought Virgin Money for £2.9bn last year without asking for their approval and critics claim it is centralising power at the top while diluting the voice of its members. But the industry is backing Crosbie, recognising the 55-year-old former TSB boss's role in pulling the sector into the political limelight. 'The truth is that mutuals have often been seen as niche: a 'nice to have but not essential',' says Peter Hunt, the founder of UK-based mutuals consultancy Mutuo. Now industry bosses are hosted at No 10 summer garden parties and asked to join a government-run Mutual and Cooperative Sector Business Council. This autumn, ministers will launch a consultation on how to double the size of the sector, in line with Labour's manifesto pledge. This kind of state-level attention, Hunt says, 'has moved the dial'. It is a sign that the sector has finally recovered from a wave of demutualisations in the 1990s that turned the likes of Abbey National, Bradford & Bingley, Halifax and Northern Rock into shareholder-owned banks. It was a blow to the UK's building societies movement, which traces its history back to Birmingham in 1775 when a group of friends, desperate to get on the housing ladder, pooled their resources to buy land and building materials. But by the time the 2008 financial crisis erupted, most demutualised firms were either acquired or nationalised through state bailouts. It left survivors such as Nationwide proud of how their simpler, more risk-averse business models, focused on savings and home loans, survived the financial implosion. Seventeen years later, Nationwide is the jewel in the sector's crown, with 17 million members and £368bn in assets. It is the second largest mortgage provider behind Lloyds, with a 12.5% share of the market. 'Nationwide is a domestically systemic banking institution,' the Building Societies Association (BSA) chief executive, Robin Fieth, says. 'It gives scale and importance to the whole of our sector.' But some believe Nationwide's growth has come at the expense of its democratic roots. While building societies centre on the idea of 'one member, one vote', there has been 'a boiling frog problem', according to James Sherwin-Smith, a longtime Nationwide customer who has campaigned to join the board as a voice for members. He says Nationwide has been 'debasing … member rights … despite all the lovely positive PR that Nationwide puts out about having your say, and that they're a beacon for mutual good. When I scratch the surface of that, I do not find substance.' Fury erupted last year over Nationwide's decision to not hold a member vote over its takeover of Virgin Money, while the takeover target's own shareholders had a say. But there are other longstanding issues, including Nationwide's use of 'quick vote' options, which make it easier to back the board's recommendations rather than cast individual or dissenting votes at its annual general meeting. There are also concerns that Nationwide has retained online-only AGMs, even after Covid lockdowns were lifted, in a move that risks disenfranchising members without internet access. Meanwhile, some members say it can be difficult to get a resolution or election on the ballot, requiring 250 to 500 endorsements from members, whose contact details can be a challenge to access due to data rules. Their signatures only qualify under strict conditions and can be disqualified if their balances or loans fall below a certain level – £100 or £200 in most cases – over the preceding two years. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Edwin Fisher of the Building Societies Members Association says that while Nationwide is the biggest of the mutuals sector, it is also the 'most controversial, and has, in our opinion, the lowest standards of corporate governance'. 'They regularly churn out the line that members are the owners, but we all know that members have no say in anything,' Fisher adds, noting that if the UK faced another wave of demutualisation, Nationwide 'would be ripe' to exit. Nationwide has not expressed any intention of demutualising. But its board says banker-level pay is necessary if it hopes to compete with the likes of Lloyds and NatWest. Fisher says members only want Nationwide to compete with banks on size, but not on pay or purpose. Furthermore, Nationwide's operations are far less complex than most banks: Crosbie does not have to manage an investment bank or international operations, nor relationships with shareholders. Even after the Virgin Money takeover, it remains a much simpler operation focused on mortgages. But Hunt says it would be inappropriate to measure Crosbie and her pay against bosses at much smaller building societies. 'She's the Lionel Messi of British building societies,' he said. 'And she could play for any of the banks, so this is how they keep her in the Nationwide shirt.' The problem for democratically minded members is that the Building Societies Act may not be fit for Nationwide's size. It means that, unlike its listed bank rivals, Nationwide is not required to hold binding votes on new pay proposals, like the one that could hand Crosbie up to £7m. While it could volunteer to hold a binding vote, Nationwide has refused. When asked whether the Building Societies Association would support reforming the act, Fieth said 'it's not a measure we'd oppose' but admitted it was not 'No 1 on our shopping list'. Hunt also questioned whether members were 'equipped' to have a binding say on pay. 'If I was a member of Nationwide, how would I be equipped to know what any executive should get paid? How would I know? Just because I didn't like the number? If you had a vote on MPs' pay, I guarantee you the vast majority of the public will want them to [be paid] less,' he said. (The basic salary for an MP is £93,904.) Fieth echoed that argument, saying some members 'found it difficult' to relate to the sums involved. 'When you've got a balance sheet that's £300bn, most people can't compute that at all.' He said members should still be asking questions, but needed to keep long-term performance and innovation in mind. 'Henry Ford said that if you'd asked people what they wanted at the beginning of the 20th century, they'd have said faster horses.' Sherwin-Smith said it was the board's burden to keep members informed. 'They should educate people and let them [hold a binding] vote, but to say you're too stupid to have a say is the wrong attitude.' Nationwide declined the Guardian's interview requests, but said it regularly engages with a panel of 6,500 members and surveys 500,000 members each year. It also said members have a chance to vote to re-elect board directors every year. 'From the extensive engagement that we have with our members, we cannot see any evidence that our leading customer service, support for first-time buyers, growing market shares and record member financial value is in any way controversial,' Nationwide said. It previously said pay proposals although advisory, 'always received overwhelming member support' and that Nationwide's strong performance was driven in part by its ability to 'attract, retain and motivate talented leaders.'
Yahoo
11-07-2025
- Business
- Yahoo
The power of cooperatives: Scaling social trust in UK retail banking
In today's fragmented and increasingly digital financial landscape, trust remains the cornerstone of sustainable retail banking. While the UK has seen significant advances in open banking, digital identity frameworks, and the rise of FinTech, a quieter transformation is underway—one that focuses less on disruption and more on human dignity, community relevance, and economic resilience. That transformation is being led by the cooperative banking movement. Institutions such as mutuals, credit unions, and community-owned finance organisations are not relics of the past. In fact, they are proving to be among the most trusted and enduring actors in the UK's retail banking system. These institutions serve not only as access points for fair finance, but also as symbols of local stewardship, democratic ownership, and long-term inclusion. As mainstream financial institutions navigate rapid digitisation, ESG demands, and mounting scrutiny on fairness and fees, cooperatives stand out for what they don't do: they don't exist to maximise shareholder value at all costs. Instead, they are governed by their members, reinvest surpluses into local outcomes, and often work in deeply personal, place-based ways that cannot be replicated by app-only banks or high-street giants. This is especially important in underserved communities—rural areas, coastal towns, urban peripheries—where trust in institutions has eroded and financial exclusion persists despite digital advances. For these areas, cooperatives are often the first and only line of financial access. Their decisions are shaped not by algorithmic credit scores alone, but by lived relationships and local knowledge. Recent data from financial inclusion audits across the UK shows that households facing credit stress are more likely to approach cooperatives than commercial lenders. Why? Because these organisations explain, educate, and empathise. They are less likely to trap customers in revolving debt cycles, and more likely to design flexible repayment solutions that preserve dignity. If the 2008 financial crisis shattered institutional trust, and if the rise of digital-only models strained human connection, cooperatives have emerged as quiet builders of a new trust infrastructure—one that is not based on marketing campaigns or brand sentiment, but on governance, proximity, and accountability. Trust, in this context, is not abstract. It is measurable in retention rates, word-of-mouth referrals, repayment behaviour, and social impact indicators. Cooperatives excel precisely because their model is trust-intensive by design. From general meetings to participatory decisions, from transparent dividend policies to community reinvestment, their value proposition is inherently ethical and relational. As the UK explores digital pound pilots, open finance frameworks, and embedded credit services, policymakers must pause to ask: what happens when digitisation outpaces trust? Cooperatives provide a critical answer. They remind us that technology must enhance human confidence—not replace it. One of the misconceptions about cooperatives is that they cannot scale. In truth, they can—but not by mimicking venture-backed fintechs. Their model is not built for exponential growth, but for deep-rooted relevance. And that kind of relevance can and must scale—especially in a national context where financial precarity is rising. For cooperatives to double or triple their impact over the next decade, they will need infrastructure support: from cloud-based core banking systems to interoperable payment tools, from onboarding automation to secure identity verification. But these upgrades must not come at the expense of their identity. Technology in cooperatives should serve three principles: inclusiveness, simplicity, and integrity. Tools must be mobile-first but not mobile-only. Digital services must be understandable to those with limited financial literacy. And most importantly, platforms must avoid recreating exclusionary mechanisms in new digital wrappers. Moreover, cooperatives must collaborate to scale. Shared service centres, federated technology hubs, and peer benchmarking platforms can help small institutions achieve scale without sacrificing their missions. These models exist in Canada, Germany, and the Netherlands—where cooperative banks account for significant market share without centralisation. There is a unique alignment between the cooperative ethos and the ESG (Environmental, Social, and Governance) agenda. While much of the financial sector is still figuring out how to authentically integrate ESG principles, cooperatives have been practicing social and governance responsibility for decades. Their lending practices often prioritise local entrepreneurs, green energy initiatives, and vulnerable groups. Their governance structures are inherently inclusive and transparent. Their social metrics—whether measured in terms of financial education, hardship support, or ethical product design—are often more genuine than those reported in glossy ESG reports from commercial firms. The UK government and regulators can further encourage this alignment by creating dedicated ESG-linked funding pools accessible to cooperatives, or by simplifying regulatory navigation for institutions that embed public good into their operating models. With the right incentives and digital tools, cooperatives can play a national role in delivering ESG outcomes from the bottom up. Inclusion in finance is not just about opening an account—it is about staying engaged with the financial system in a way that is safe, fair, and supportive. Cooperatives have long understood this. Their member-first approach often includes embedded financial literacy programmes, debt counselling, savings nudges, and relationship-based credit underwriting. This is especially powerful in the current macroeconomic climate. With interest rates fluctuating, energy costs rising, and economic volatility affecting household resilience, there is an urgent need for institutions that take a long-term view of financial wellbeing. Cooperatives offer precisely that. They are patient capital providers, not predatory lenders. Policy frameworks should reflect this by supporting hybrid models: physical branches or service desks embedded within local institutions (libraries, councils, schools), supported by robust digital infrastructure. Financial inclusion is most sustainable when it is omnichannel, culturally relevant, and designed with empathy. The UK is at a crossroads. It can pursue a hyper-centralised, digital-only banking future that risks further marginalisation of vulnerable groups—or it can invest in plural models of finance where cooperatives play a central role. The second path is not only more resilient—it is also more democratic. In a time where citizens are demanding more transparency, more fairness, and more meaningful participation in economic systems, the cooperative model holds deep promise. It redefines what 'value' means in banking—not just shareholder value, but societal value. This opportunity will require courage. Regulators must be willing to revisit thresholds and proportionality frameworks. Funders must be willing to support community infrastructure, not just app-based innovation. And society must be willing to value slower, deeper models of banking that may not trend on tech charts—but deliver real outcomes for real people. Cooperatives do not need to dominate market share to shape the future of banking. They need only to remain true to their roots—and supported by modern tools and public frameworks. If scaled wisely, their impact can be felt across affordability, inclusion, resilience, and trust. The UK banking sector needs more than innovation. It needs intention. And cooperatives, with their human-first blueprint, may well be the most future-ready model we already have. "The power of cooperatives: Scaling social trust in UK retail banking" was originally created and published by Retail Banker International, a GlobalData owned brand. 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