£100 payment - Nationwide Fairer Share

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  • boingy
    boingy Posts: 1,166
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    I'm sure the Nationwide management are more than aware that their qualifying criteria has ruffled a few feathers. There have certainly been enough complaints to the ombudsman to warrant them putting up a special page about it to discourage further complaints. So next year I would expect Nationwide to change the criteria or maybe even to avoid redistributing profits at all. As someone further up pointed out, a mutual should not be making profits - they should be using any excess money to make their products better value for all of their members. They seem to have forgotten that.
  • wmb194
    wmb194 Posts: 3,126
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    boingy said:
    I'm sure the Nationwide management are more than aware that their qualifying criteria has ruffled a few feathers. There have certainly been enough complaints to the ombudsman to warrant them putting up a special page about it to discourage further complaints. So next year I would expect Nationwide to change the criteria or maybe even to avoid redistributing profits at all. As someone further up pointed out, a mutual should not be making profits - they should be using any excess money to make their products better value for all of their members. They seem to have forgotten that.
    Mutuals, and particularly if they're building societies, absolutely need to earn profits. If they don't then how can they e.g., expand and invest and how, as building societies, build enough loss-absorbing capital to get them through the next downturn when they'll inevitably experience loan defaults? In the past decade or so this is what Nationwide has been doing and it appears to be more than ready.

    They don't have shareholders so they cannot do as e.g., Barclays did when the Bank told it it was short of capital and have a quick rights issue, they end-up 'doing a Co-op Bank' and failing or being bought/taken over because the Co-op Group, despite boasting for years about having many millions of them, couldn't raise a penny from any of its, 'owners' and didn't have the resources built up to see it through.
  • boingy
    boingy Posts: 1,166
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    wmb194 said:
    boingy said:
    I'm sure the Nationwide management are more than aware that their qualifying criteria has ruffled a few feathers. There have certainly been enough complaints to the ombudsman to warrant them putting up a special page about it to discourage further complaints. So next year I would expect Nationwide to change the criteria or maybe even to avoid redistributing profits at all. As someone further up pointed out, a mutual should not be making profits - they should be using any excess money to make their products better value for all of their members. They seem to have forgotten that.
    Mutuals, and particularly if they're building societies, absolutely need to earn profits. If they don't then how can they e.g., expand and invest and how, as building societies, build enough loss-absorbing capital to get them through the next downturn when they'll inevitably experience loan defaults? In the past decade or so this is what Nationwide has been doing and it appears to be more than ready.

    They don't have shareholders so they cannot do as e.g., Barclays did when the Bank told it it was short of capital and have a quick rights issue, they end-up 'doing a Co-op Bank' and failing or being bought/taken over because the Co-op Group, despite boasting for years about having many millions of them, couldn't raise a penny from any of its, 'owners' and didn't have the resources built up to see it through.
    I should have said "excess profits". Any money reinvested in the business doesn't really count in that. In Nationwide's case they have handed out £340 million to about one fifth of their members. That's not expanding the business or building up a war chest. 
  • boingy said:

    So next year I would expect Nationwide to change the criteria or maybe even to avoid redistributing profits at all. 
    But just in case they don't change the criteria and in the spirit of pragmatism, get yourself a Flex Direct current account that will pay you 5% on £1500 for a year and a Start to Save paying 5.5% on £50/mth. 
  • wmb194
    wmb194 Posts: 3,126
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    edited 23 July 2023 at 7:34AM
    boingy said:
    wmb194 said:
    boingy said:
    I'm sure the Nationwide management are more than aware that their qualifying criteria has ruffled a few feathers. There have certainly been enough complaints to the ombudsman to warrant them putting up a special page about it to discourage further complaints. So next year I would expect Nationwide to change the criteria or maybe even to avoid redistributing profits at all. As someone further up pointed out, a mutual should not be making profits - they should be using any excess money to make their products better value for all of their members. They seem to have forgotten that.
    Mutuals, and particularly if they're building societies, absolutely need to earn profits. If they don't then how can they e.g., expand and invest and how, as building societies, build enough loss-absorbing capital to get them through the next downturn when they'll inevitably experience loan defaults? In the past decade or so this is what Nationwide has been doing and it appears to be more than ready.

    They don't have shareholders so they cannot do as e.g., Barclays did when the Bank told it it was short of capital and have a quick rights issue, they end-up 'doing a Co-op Bank' and failing or being bought/taken over because the Co-op Group, despite boasting for years about having many millions of them, couldn't raise a penny from any of its, 'owners' and didn't have the resources built up to see it through.
    I should have said "excess profits". Any money reinvested in the business doesn't really count in that. In Nationwide's case they have handed out £340 million to about one fifth of their members. That's not expanding the business or building up a war chest. 
    Well, there's the perennial problem of defining what, "excess profits" means and to build meaningful levels of loss absorbing capital at an already large bank/BS you'll need to earn good profits but I agree, Nationwide should have just distributed its 'surplus' profits through e.g., better interest rates, market leading 'loyalty' accounts and the like. You know, the way building societies usually claim to do it!
  • boingy
    boingy Posts: 1,166
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    boingy said:

    So next year I would expect Nationwide to change the criteria or maybe even to avoid redistributing profits at all. 
    But just in case they don't change the criteria and in the spirit of pragmatism, get yourself a Flex Direct current account that will pay you 5% on £1500 for a year and a Start to Save paying 5.5% on £50/mth. 
    I already have an active savings account with a healthy balance and I've had a current account for over 30 years. But the current account is mostly dormant so it didn't ring the ding ding free money bell. I am pondering whether to cycle some money through it each month just in case they keep the same criteria next year. It's hard to say what would annoy me most, me doing that and them changing the criteria or me not doing that and missing out when the criteria stays the same! 
  • nic_c
    nic_c Posts: 2,928
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    I'm switching my Flex Direct out for a switching bonus as I've had a couple of years. Think once that's done will open a new one (probably just a FlexAccount, since you can't get the 5% again) before the end of the year.

    Will they change the criteria? Not sure - they were pretty low and probably want to keep it so going to as many, rather than face adverse publicity from moving the goalposts.
  • King_Of_Fools
    King_Of_Fools Posts: 1,590
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    edited 2 August 2023 at 10:43AM
    Nationwide said the fairer share was ‘deliberately’ planned to reward current account holders, many of who get a 0% return.
    So why not just pay interest on the current accounts like they used to?

    It is very clear from what they say that the scheme was intended as a marketing strategy to attract new current account holders (as we had speculated since it was announced). The intention being to try and make people keep the current accounts open year after year and not just keep switching. Maybe, if it works, and they can then stop paying switching bonuses, it may not be such a bad thing.
  • oldagetraveller1
    oldagetraveller1 Posts: 1,258
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    edited 2 August 2023 at 3:33PM
    It most certainly didn't encourage me to keep a current account open year after year.
    It came as an unexpected bonus to the £200 switching in incentive already received.
    The £100 was very acceptable in spite of personally not really deserving it. Of course, it would have gone completely against the grain to opt out.
    I switched elsewhere soon after.
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