James4Nationwide

Elect James Sherwin-Smith to represent Nationwide building society members

Rebels with a cause: standing on the shoulders of giants

Pictured: Shelia Heywood presenting a cheque on behalf of Nationwide to Buxton Mountain Rescue in 1989

As I canvass for nominations to support my own candidacy to stand for election as a Director of the Nationwide building society – I am naturally drawn to research those that have attempted this before.

Finding information on the who, when and why has proven an interesting research project.  The online mutual society register maintained by the FCA has some big gaps in its records – I have requested that more are digitised.  The society doesn’t maintain a large online archive of AGM results and minutes, annual reports etc. Few online news archives go back before the year 2000 (before the internet went mainstream).

Since 1980, I have only identified three candidates who were successfully elected to the board after receiving the requisite member nominations:

  • Paul Twyman – elected to the board of the Anglia building society after several attempts and considerable activism. He served on the Anglia board from 1982, joining the Nationwide board at the merger in 1987 and continued serving until 2002.
  • Sheila Heywood – elected after several attempts, who served on the Nationwide board 1988 until at least 1993. She was one of the first female directors of the society.
  • David English – a former Nationwide manager who was made redundant the year before and I believe was elected at the first attempt. He served on the Nationwide board 1993 to 2002.

Note that all three served at the same time for a period from 1993 until Shelia Heywood stepped down.

I have also identified several candidates that secured sufficient nominations to be entered on the ballot at AGMs but did not receive sufficient votes to elected.
[NB the following list may not be complete for the period 1992-1997 as I do not have a complete list of AGM voting results – entries for 1992 and 1993 were gleaned from newspaper reports filed at the time.]

  • Vivian Singh (1992-93)
  • Ben Jacobs (1992-93)
  • Michael Hardern (1998)
  • Andrew Muir (1998, 2001-02)
  • Alan Debenham (1999-2005)
  • Tim Tanner (2002-03)

I’m now searching to fill a gap in my research that picks up from where Michael Cassell’s book “100 years of Nationwide” leaves off and recent records (mostly online) begin.

FT article: What does it mean to be a building society member?

I am grateful to Akila Quinio who quoted me in this Financial Times piece published today regarding Building Society membership: What does it mean to be a building society member?

She asked me three questions given I am running for election to the board of Nationwide: my full answers are below.

If you’d like to support my candidacy, it’s a 3 minute task to complete a one page nomination form.

1. What are the benefits of being a member?

The mutual structure means that as a member you are a customer and an owner of the society – there are no shareholders. Membership therefore means the society should be solely focused on delivering the best outcomes for members in terms of the products and services it offers, and members have the opportunity to determine how the society is run and governed. Mutuals are an important competitive force and are a check and balance on the shareholder-owned financial services industry.

2. How much power does it give you?

Membership power is limited to what is enshrined in the memorandum and rules of the society, and to what is protected by law, primarily under the Building Societies Act. In theory, members can change the rules of their society, call and attend general meetings, propose and vote on resolutions, nominate and elect board members. Over time, the democratic power of the mutual “one member, one vote” governance model has been steadily eroded.

3. And are there any drawbacks?

The degree of influence that the membership has on society affairs is dependent on how active the membership is – if members are passive, and don’t exercise their powers, the organisation becomes increasingly autocratic. Take the recent Nationwide AGM as an example. There were no alternative member proposed resolutions or alternative board candidates. Voting turnout was less than 4%, and all but one of the resolutions and re-elections were approved at 95% or higher.

If Nationwide was a country (and with 16 million members eligible to vote, it has that scale), that election setup and result would be cause for alarm to any casual observer.


This is why I am seeking nominations from fellow members to stand for election as a director of Nationwide. I want to breathe more life into the membership model – with more members actively engaged. Nationwide is and should remain a mutual that is members owned, but it should also be run and governed accordingly. This is important for Nationwide, but also for the benefit of everyone in the UK, given its position as the largest mutual and the second largest mortgage provider.

A healthy, engaging and competitive Nationwide means better banking for all.

Why mutuals matter

While working at Oliver Wyman, I had the privilege to co-author a report titled “Co-operative Bank: Customer Champion” for the European Association of Co-operative Banks in 2008. I wrote this with Mark Weil, who subsequently became the CEO of Marsh UK, and then TMF.

With the help of a project team, we had the opportunity to study the co-operative banking sector and get to the heart of what made it both unique and vital to most of the major national economies in Europe.

The title still resonates with me today – co-operative banks (or mutual / building societies) are uniquely placed to be Customer Champions within the Financial Services sector. After all, the customers, via membership, are the owners of the organisation. A well run building society doesn’t need to profit maximise to appease foreign or institutional shareholders – instead it should be maximising the benefits of membership for its own customers.

My key learnings:

  1. The co-operative banking sector provides an effective check and balance on the influence of commercial banks. One of the key analyses (Figure 7) showed that the larger the market share of the co-operative (or mutual) banking sector, the fewer complaints per capita to the financial ombudsman in that country.
  2. The importance of brilliant Execution (best measured by organic growth)
  3. Why Membership is a key concept and must be kept vital (best measured by a high proportion of customers being active members)
  4. Capital must be managed effectively (best measured by the common equity tier 1 ratio aka CET1) – striking the best balance between maintaining a loss-absorbing buffer, and either putting capital to work or releasing it back to members
  5. Good Governance is essential given the unique “customers are the owners” model and “one member, one vote” principle (best measured by member engagement)
  6. A thoughtful approach to Expansion is needed if the benefits of co-operatives are to be made available to more people (best measured by growth in the co-operative / mutual sector – both at home and abroad)
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