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

ellie99

metrobus said:

Of course it’s fair for the real customers to get the pay out and not the parasite vultures.

Parasite vultures?

It's a big leap from having savings or a mortgage (but no current account) to being a parasite vulture!

I think some people are just annoyed because Nationwide are only valuing current account holders. Now we know where their priorities lie.

Grumpy_chap

This thread is the first I heard of the "fairer share" payout.

Some here will recall the "carpet-bagging" days and the Nationwide remaining a mutual.  I had my savings with Nationwide before the carpet-bagging days, through those days and continuously so still hold the same accounts.  There was much said when Nationwide remained a mutual about the organisation being owned by all the members for ever.

If there is a decision to provide some reward to current account holders and that furthers good business sense, then so be it.

What is rather disingenuous by Nationwide management is to call that incentive "Fairer Share" as it does create the impression that the payment is the equivalent of a dividend in some form (with all members being equal owners) going to the members rather than the shareholders (that don't exist being a mutual).

This is possibly getting the level of discussion because it is poorly branded.

Band7

ellie99 said:

....... Nationwide are only valuing current account holders.  

They don't. 

If you only have a current account, you are not eligible. You need either a mortgage or a savings account in addition to a current account to qualify for the 'fairer share'.

Band7

What would your solution look like for the following: 

1. Nationwide have 17m members
2. By June 30 2023, Nationwide want to distribute £340m profit amongst members
3. Nationwide want a simple, low cost, process to administer and execute the distribution
4. Your solution must be fair to all members

metrobus

1. Should have an active current account  for at least 12 months with at least £750 a month going into it from outside sources each month for 12 months.

2. Should have a savings account with at least £100 in it and/ or a mortgage with NW .

3.Should not have received £200 switching freebie in the last 2 years.

That  sounds fair to me .

Band7

metrobus said:

1. Should have an active current account  for at least 12 months with at least £750 a month going into it from outside sources each month for 12 months.
 

Unfair to members who for some reason get less than £750 a month. E.g. people on UC, pensioners on low state pension, part time workers?

metrobus said:

 
2. Should have a savings account with at least £100 in it and/ or a mortgage with NW .

Unfair to members who, for whatever reason, cannot to save anything ? Unfair to members who rent?

metrobus said:

3.Should not have received £200 switching freebie in the last 2 years.

That would seem a fair exclusion


Would you also consider members who hold a Nationwide credit card? What about members who have a Nationwide loan?



How many of the 17 million members would your proposal be for? How much would each of your eligible members get? Remember, all you have is £340 million.


I am not really expecting answers. I just wanted to demonstrate that, IMO, it's nigh on impossible to come up with an affordable solution that would satisfy everyone.

Ocelot

Ok Ok, maybe it wasn't 15%, maybe it was just over 20%, but still pretty poor decision.

TheBanker

Credit card and loan customers are not members (unless they qualify as a member by holding a current account, savings account or mortgage as well). So they do not need to be included in a distribution of the society's profits.

As the profits have been generated by savers and mortgage holders (the profits essentially being the difference between the interest the savers received and the interest the mortgage holders paid), it is fair to concentrate on these products. The traditional role of a building society is to take savings deposits and lend to people to buy houses. The focus on these products means a renter with no savings loses out, but they have not contributed to the purpose of the society, or its profits, in the same way that savers and borrowers have.

So I would have set some criteria:

• Must have been a member for at least 12 months, and must still be a member at the date of payment
• Maximum payment of £100 per member.
• Apply a threshold below which no payment will be made (e.g. £5) to simplify administration. 
• Calculate the average balance across savings and current accounts per member during the period (joint accounts to be split 50/50 between the members named)
• Calculate the average balance across mortgages in the same way
• Distribute the £340m by paying a percentage of average balances held. The actual percentage would be calculated to use the full £340m taking into account the maximum payments and minimum payment threshold. 

Note that I am treating mortgage and credit balances separately - so a customer who has a mortgage and savings will receive credit for both rather than having their savings off-set against their mortgage. I'm also giving current account customers credit for their balances, even though liquidity rules mean these aren't as useful in supporting mortgage lending as savings balances are. 

The difficulty with that approach is that the actual % would be a very small number, so the headlines of 'Nationwide giving members £100' would not be possible. But I think it would be a fairer way to distribute profits.

Or, perhaps more fundamentally, we could ask why Nationwide has made an excess profit of £340m in the first place. They need to make sufficient profit to invest in the future of the society, but as they have no shareholders they should not be generating surplus profit for distribution. So we're back to the point about why they're not increasing savings rates and/or reducing mortgage rates. 

onlyconnect

TheBanker said:

Or, perhaps more fundamentally, we could ask why Nationwide has made an excess profit of £340m in the first place. They need to make sufficient profit to invest in the future of the society, but as they have no shareholders they should not be generating surplus profit for distribution. So we're back to the point about why they're not increasing savings rates and/or reducing mortgage rates. 

Nationwide does have better savings rates than most high street banks. NatWest for example has much lower savings rates.

Tim

masonic

Agree that it is impossible to be fair to every single member. However, that doesn't mean that they shouldn't try to be fair to as many members as possible. There will always be edge cases, but the ideal solution will be acceptable to the vast majority of members and not just benefit only a small proportion of those who have contributed to the success.

Personally, I'd advocate reinvesting it to the betterment of existing products and services. I think the directors are woefully lacking in ambition if they are saying the customer experience is as good as it can be.

Too late now, but they could have come up with a shortlist of options (such as those discussed by the members panel) and put it to a resolution at the AGM. Given turnout is usually so low, perhaps offer everyone voting a fiver and let Martin Lewis and others help promote it.