Better to bank with a mutual

EVERYONE'S talking about mutuality again. Some people think its days are numbered. They will tell you that Equitable Life and Standard Life are two big nails in the coffin.

Besides, isn't the idea of customers actually owning their business a bit quaint and old-fashioned for the 21st century?

Well, no. It's true that mutuality is an old and well-established concept. But the values that led to the growth of the mutual movement in the 19th century are still relevant today.

Building societies were formed to enable ordinary people to save for the future and borrow to buy their own homes. Ring any bells?

Today, people still want the same things. They also want to do business with people they can trust. Mutuals have a crucial role to play in the financial services marketplace. But to do so, they must be well-run and modern in their approach.

Levels of corporate governance must be seen to be high. Mutuals should not have lower standards. At Nationwide, we always ensure we can meet and exceed the rules for public limited companies.

For example, Nationwide discloses directors' pay and puts this to a vote, despite the fact that this is not a legal requirement for mutuals, only for companies listed on the Stock Exchange.

Directors are directly accountable to our customers - we call them members. All board directors are elected by members and have to stand for re-election regularly. That serves to focus directors' minds on exactly what members want.

If members are unhappy with the way their society is being run, they can nominate and vote for others. It's a simple process and it works. We've had a contested election every year for more than 20 years.

Modern? Very much so. Modern mutuals bring dynamism and innovation to the market.

Some of the best deals for mortgages, savings, loans and credit cards consistently come from the mutual sector.

We have an impressive track record of delivering long-term good value. Without shareholders clamouring for a dividend, we have an inherent advantage. There is no extra mouth needing to be fed.

Nationwide's philosophy of delivering better value in a way that is fair, honest and transparent produces tangible benefits for members - we have returned around £2.7bn to members since 1996 through better interest rates and fewer fees and charges.

Other mutuals have a range of similar ways of rewarding their members.

Mutuals are making a difference, not just to their own customers, but for all consumers as well. For instance, credit card issuers have followed our lead and introduced a summary box in their literature, which explains the key features of their plastic.

Similarly, Nationwide has been pivotal in ensuring that cash machines which charge customers carry early warnings.

Our approach to mortgage pricing - with all our deals available to all customers - has found favour with many new and existing borrowers.

After all, why should new borrowers get a better deal than those who have been loyal to an organisation for many years?

OURS is a business model that lets us take a long-term view, rather than rush for short-term profit. So we have taken a stand on outsourcing call centres abroad.

I have received a tremendously positive response from many people since we declared that we would keep our call centres in the UK. We are just not prepared to outsource our key contacts with our members.

I'm not claiming that mutuals are perfect, or that plcs are always to be mistrusted. At Nationwide we can and do offer people the chance to be a real stakeholder in their organisation, with a different relationship to that of a shareholder.

We are bringing something distinctive and different to the marketplace. Who needs mutuals anyway? I think we all do.

Philip Williamson is chief executive of Nationwide Building Society