Democracy within building societies was one of the main topics of discussion at a recent debate aimed at assessing the pros and cons of mutuality and demutualisation, held at the House of Commons.
MP Gareth Thomas hosted the event as part of a bid to make demutualisation more difficult through an Industrial and Provident Societies Bill, which, if passed, could be in force by July. He believes mutuals offer a democratic system to their members.
‘Mutuality brings a set of values and a different approach to business. The advantage of a mutual is that it brings a democratic engagement with members. Building societies have invested in engaging with members, and this cannot happen in a plc as the customers are not members,’ he said.
The debate included Martin Clarke of Co-operative Insurance Services; Graham Leftwich of Britannia Building Society; Richard Yendall of Carpertbagger.com; Fred Woolard, an Australian fund manager and former carpetbagger; Thomas Coops, of Abbey National; and Paul Braithwaite of Equitable Life Members Action Group.
Yendall, currently standing for election to the board of Britannia, said the way Britannia handled the voting forms, which were sent to members, was not democratic. Britannia printed: ‘The board recommends that you do not vote for this candidate,’ below Yendall’s name.
Yendall said: ‘Britannia’s voting system is not democratic. Mutuals would work better if we had more resolutions tabled at the AGM. If I get on board, I won’t be proposing mutuality ‘ I will change how loyalty schemes work and would like to see the board encouraging people to vote on issues, and be fairer on director elections.’
But Leftwich said: ‘You could argue this is not how a political election is run, but it is not a political election. We have a legal duty to inform members of our views. Yendall hasn’t done anything wrong in standing for the board, but we don’t believe he has the necessary skills. Some members trust us with their life savings ‘ this is not something anyone can do.’
Clarke backed Leftwich by claiming anyone who stands on the board of a mutual must have sufficient expertise.
He added: ‘You need someone to demonstrate a strong commitment over several years. Having good organisation and legal backing means mutuals can compete with plcs.’