Nationwide mortgage - no benefit from mutuality?

PBA

Slightly odd query, but I took out a mortgage today with the Nationwide. On re-reading the paperwork tonight, there is an odd sounding paragraph at the end of the small print. The gist of it is:

CHARITABLE ASSIGNMENT
I apply to be a charity member of the Nationwide Foundation...I will be bound to assign to the Foundation...the rights to any copnversion benefits to which I would become entitled as a member...The agreement is irrevocable.

For this purpose "conversion benefits" means any benefits under the terms of any future transfer of the Society's business to a company (i.e. on conversion or take-over).

Am I reading this right, that I'm being forced to agree to surrender ownership of my share of the company in the event of demutualisation? If this is true, it makes a mockery of the opening statement in each of the advertising brochures they gave me which go on about the fact that they're a building society rather than a bank. If they're taking the only real benefit away from me then they may as well be a bank.

epz_2

the benifit of a building society is it will plough the profits it makes back into lower morgage rates and high interest on savings.

if you want to join a co-oparative in the hopes the demutualise and you make a quick buck at the expense other savers and borrowers of the future then your the type of person they put that clause in for

PBA

Except they don't. All Nationwide's savings rates are currently beaten by banks, as are the majority of their mortgage rates. For someone needing a very small FTB mortgage (ie me) they are offering the best deal which is why I signed up with them.

I didn't sign up for a Nationwide mortgage in the hope of a windfall payout, but I'm also upset that I won't be able to claim my rightful share of the company should they decide to convert to a plc.

MarkyMarkD

PBA, you are quite right.

As much as mutuals bang on about the "benefits of mutuality" (and Nationwide spout made-up figures for these benefits in their annual accounts each year) they are still not best buy in every category. In fact, in every category they are beaten by other lenders, most of which are banks.

No bank or building society can realistically offer the best value products across the board; all of them indulge in a degree of cross-subsidisation meaning that some accounts are loss-leading and others make them some money.

Nationwide seem to focus their "mutuality" benefits in:

- low SVR - which mainly benefits the lazy who can't be bothered to remortgage;
- occasional loss-making member loyalty savings products - which benefits only people able to tie up the necessary amount of money for the necessary amount of time;
- no credit card/debit card overseas transaction charges - which benefits only people who shop overseas or online from overseas suppliers.

You could look at any other bank or building society, and they will offer:

- some mortgage products which are better value than Nationwide's; and
- some savings accounts which offer better rates than Nationwide's.

So to claim that there are benefits from mutuality is somewhat over-egging the pudding.

If you are a MSE and behave in an MSE way, you won't benefit much from Nationwide's mutual status.

If you are a customer who doesn't like to make much effort with their finances, you MAY benefit slightly with Nationwide compared to being with other banks/building societies. But you'd save an awful lot more by behaving in an MSE way and picking the best products from the best providers in each individual case.