Nationwide's 'Fairer Share' £100 payment for eligible members

ForumUser7

Albermarle said:

Only ~15% of their profits are allocated towards this payout. Most of it has been put into lowering their rates (this was posted earlier).

Presume you meant increasing their rates ?

 I'd be interested in how this product compares to other high street banks.

Two year fix rates

Lloyds - 4.25%; NatWest 4.39%; HSBC 4.1% ; Co-op 4.12 %; Santander 3.5% to 3.75%

I think OP means lowering mortgage rates

Edit: For example: Nationwide cuts selected higher LTV mortgages Nationwide Cuts Mortgage Rates Nationwide further reduces mortgage rates The Mortgage Works further reduces switcher rates Nationwide further reduces mortgage rates for new and existing borrowers Nationwide further reduces mortgage rates All this year

Exodi

Albermarle said:

Only ~15% of their profits are allocated towards this payout. Most of it has been put into lowering their rates (this was posted earlier).

Presume you meant increasing their rates ?

 I'd be interested in how this product compares to other high street banks.

Two year fix rates

Lloyds - 4.25%; NatWest 4.39%; HSBC 4.1% ; Co-op 4.12 %; Santander 3.5% to 3.75%

I had meant lower rates (as in relevant to mortgages), but you're right it also applies to increasing the rates on their saving products over their competitors.

What I should have said is improved or 'better rates' (as they put it themselves: https://www.nationwidemediacentre.co.uk/news/nationwide-building-society-launches-nationwide-fairer-share-to-return-greater-value-to-members )

Thanks for linking the other two year fixed rates, I hope this may allay the doubts of the neigh sayers (though probably not).

Section62

Exodi said:

I have tried so hard to find common ground with those complaining on this thread, and accept it is unfair to those that don't hold current accounts (but large balances with Nationwide otherwise). But I'm having trouble sympathizing with people, who by their own admission, barely use Nationwide but feel entitled to a share of the profits.

I think part of the issue is that the people can see other people who "barely use Nationwide" being entitled to the share of the profits.  It is the arbitrary nature of the payout which jars with some of us.

Exodi said:

I'm sorry, I hold an (empty) current account with First Direct, and a regular saver with a couple of grand in it (a current account is a condition of their 7% regular saver, as I'm sure many are aware). I just can't imagine I'd be foaming at the mouth if First Direct announced some sort of loyalty reward and I didn't get it.

The difference is First Direct is a 'shareholder-owned bank'.  If they offered a reward for customer loyalty it wouldn't be on the basis of rewarding shareholders.  Nationwide emphasise how this payment is part of the benefits of being a member.

In passing, "foaming at the mouth" is another example of the kind of language I find disappointing in this discussion.  It implies that those expressing a view that Nationwide have done wrong are in some way mad or irrational.

Exodi said:

Only ~15% of their profits are allocated towards this payout. Most of it has been put into lowering their rates (this was posted earlier).

The concept of "profits" for Nationwide as a mutual building society isn't straightforward.  Although it has been stated earler in the thread that most of the 'profit' "has been put into lowering their rates", I'm not sure that is correct, and would be interested to see where that claim comes from.

For context it should be pointed out that Nationwide itself uses a concept of "member financial benefit". I.e. the amount it estimates members are better off by in total as a result of Nationwide being a mutual building society. This figure includes the benefit from Nationwide's interest rates vs its chosen comparators.

In my view 15% of the 'profits' is a big slice of cash to hand out as they have.  In the context of the total "member financial benefit" for 2022 being £325m (£265m for 2021) then we can see that despite any attempts to diminish the scale of this cash payout (=£340m), it alone represents a sum greater than Nationwide's estimate of the whole of the "member financial benefit" for the previous year.

If Nationwide have put more money into making their rates more competitive then it is a mystery to me how they have still ended up with £340m in change down the back of the sofa.

Exodi said:

Its apples and oranges - Nationwide comes with infrastructure that savers may prefer (such as physical branches, ability to transact in multiple ways, good customer service, etc). It's not fair to compare it to online outfits that have far lower overheads and are typically able to offer the highest rates of interest. I'd be interested in how this product compares to other high street banks.

Nationwide isn't supposed to be a high street bank... so that would be apples and oranges too.

Nationwide should be paying better rates than high street banks because it doesn't have to pay shareholders.  They keep telling us this is one of the benefits of them being a mutual, but always when it comes to comparing savings rates they fall back to comparing with 'high street banks'.

Albermarle

zagfles said:

Albermarle said:

Ciprico said:

They want to retain active current account holders...simples...

People will always shop around for best mortgage/saving accts and even open up ghost current account to access best savings accounts.

The holy grail is getting people to really move their current accounts and retaining the same.

So that is what they want to encourage..

Stop moaning ! 

This would appear to be the main motivation, a way of trying to discourage people from switching out of their current account over the next 12 months. 

Why would that discourage them? You can get £200 by switching to NatWest, RBS or HSBC. I imagine it would enourage those with a current account who didn't get the bonus.

You are right it would not discourage the active switchers. Or have any effect on the majority of Nationwide customers who probably will never switch ( same as with other banks) . However it could influence a cohort of customers, who sometimes think about switching and may eventually get around to doing it one day, when they can be bothered/get over their anxiety about the possible hassle.
Now they might think, why bother as I will get £100 anyway for staying.

On the other hand, it may push others to leave through dissatisfaction with the term of the bonus as can be seen from  contributors to this thread. However away from this forum I suspect the backlash could be limited, but we will see. 

TheBanker

Problem is nobody knows who will get the bonus next year, as they could change the rules (or not make enough profit to pay one).

If this is going to be a permanent thing, then they should accrue points throughout the year based on balances (and transactions on current accounts). The points then get conveŕed to cash at year end, with the conversion rate based on the total number of points awarded and the amount of profit available for distribution. A bit like how the Co-op dividends work.

zagfles

Exodi said:

zagfles said:

Exodi said:

km1500 said:

for me the problem with the way they have done it is that there are not just a few members 'on the edge' who have missed out - there are very very large number of members who have missed out and that is fundamentally unfair

A lot of people have waded in with the view that the current terms are not fair, but very few have offered alternatives.

Where would you set the goalposts? Half the bonus, remove the current account requirement but increase the savings/mortgage balance needed to double the amount of members eligible? What about the objections from people that are £1 short of the savings requirement?

The vast majority of their profits come from "net interest income" ie interest they charge minus interest they pay out. So if, as their press release implies, this is a profit share, then that share should surely be in proportion to the members' contribution towards their profits. So maybe based on loan/mortgage balance, and savings/current account balance. Perhaps tiered in some way, or something like £1 for every £100 of average balance over a period (whether savings, mortgage, current account, credit card etc).

That would reward members in proportion to their contributions towards their profits.

I'm not against this, it seems logical. I expect mortgage holders would see the majority of the benefit.

Nonetheless, I'm not sure it solves the problem for the people complaining on this thread - just looking at this page (sorry but I'll include you in this), some have already admitted they hold very low balances on Nationwide:

boingy said:

My current account and normal savings account are pretty much empty
...
My Nationwide mortgage was paid off a few years ago.
...
I have an active regular saver account which has over £1000 in it. 

zagfles said:
Others may just move money out of current accounts they don't use much, I've just emptied mine.
...
Also I've had a savings account I don't use with 1p in it, I've just closed it, and it asked whether I want the proceeds transferred to another account or a cheque sent in the post. I opted for the latter.

I have tried so hard to find common ground with those complaining on this thread, and accept it is unfair to those that don't hold current accounts (but large balances with Nationwide otherwise). But I'm having trouble sympathizing with people, who by their own admission, barely use Nationwide but feel entitled to a share of the profits.

I'm sorry, I hold an (empty) current account with First Direct, and a regular saver with a couple of grand in it (a current account is a condition of their 7% regular saver, as I'm sure many are aware). I just can't imagine I'd be foaming at the mouth if First Direct announced some sort of loyalty reward and I didn't get it.

Clearly there won't be any solution that satisfies everyone. The account I had with 1p in it was an old account I don't use, I don't expect any sort of bonus for that account! You seem to be assuming that's all I had with them! I have other savings accounts, a mortgage, and a credit card with them all actively used and for over 2 decades.

zagfles

Exodi said:

zagfles said:

I've just opened one at 5.07% nominal (AER 4.95%, still better than NW). Required zero "loyalty".

Its apples and oranges - Nationwide comes with infrastructure that savers may prefer (such as physical branches, ability to transact in multiple ways, good customer service, etc). It's not fair to compare it to online outfits that have far lower overheads and are typically able to offer the highest rates of interest. I'd be interested in how this product compares to high street banks.

As it clearly states, the new NW bond is an "online" product designed for "Savers who want to open and manage their account online" and "not designed for ...Savers wanting to open or manage their account in branch".

So this is a product you have to open/manage online and not use their branch/CS infrastructure for. That infrastructure should be paid for by their products which need/can use it.

https://www.nationwide.co.uk/savings/fairer-share-online-bond/

ForumUser7

zagfles said:

Exodi said:

zagfles said:

I've just opened one at 5.07% nominal (AER 4.95%, still better than NW). Required zero "loyalty".

Its apples and oranges - Nationwide comes with infrastructure that savers may prefer (such as physical branches, ability to transact in multiple ways, good customer service, etc). It's not fair to compare it to online outfits that have far lower overheads and are typically able to offer the highest rates of interest. I'd be interested in how this product compares to high street banks.

As it clearly states, the new NW bond is an "online" product designed for "Savers who want to open and manage their account online" and "not designed for ...Savers wanting to open or manage their account in branch".

So this is a product you have to open/manage online and not use their branch/CS infrastructure for. That infrastructure should be paid for by their products which need/can use it.

https://www.nationwide.co.uk/savings/fairer-share-online-bond/

They also have a branch bond at the same rate - https://www.nationwide.co.uk/savings/fairer-share-branch-bond/

xylophone

allay the doubts of the neigh sayers (though probably not).

I doubt the gee-gees are much concerned....

zagfles

Exodi said:

Albermarle said:

Only ~15% of their profits are allocated towards this payout. Most of it has been put into lowering their rates (this was posted earlier).

Presume you meant increasing their rates ?

 I'd be interested in how this product compares to other high street banks.

Two year fix rates

Lloyds - 4.25%; NatWest 4.39%; HSBC 4.1% ; Co-op 4.12 %; Santander 3.5% to 3.75%

I had meant lower rates (as in relevant to mortgages), but you're right it also applies to increasing the rates on their saving products over their competitors.

What I should have said is improved or 'better rates' (as they put it themselves: https://www.nationwidemediacentre.co.uk/news/nationwide-building-society-launches-nationwide-fairer-share-to-return-greater-value-to-members )

Thanks for linking the other two year fixed rates, I hope this may allay the doubts of the neigh sayers (though probably not).

Even then, simply comparing one particular niche product which NW are tring to promote doesn't tell you much. Not that many people want to tie money up for 2 years.

Try more common/useful products, for instance no-strings easy access savings. NW rate is 2.5%, I have a Santander one at 3.25%. Post Office have one at 3.47% and I'm fairly sure they have more infrastructure to maintain than NW.