Don’t turn up! Big firms bar investors from AGMs
Great to read this article from Patrick Tooher in today’s Daily Mail addressing this important topic (which also kindly quoted me).
You can read the article online: Don’t turn up! Big firms bar investors from AGMs
Limiting the ability for shareholders and members to hold boards to account via online-only (and thus often highly stage-managed) AGMs is bad for governance, and the Financial Reporting Council good practice guide questions the legitimacy i.e. does the definition of “place” include some corner of the internet?
A number of organisations have used the extraordinary circumstances of the pandemic to eliminate the in-person AGM. The argument that virtual-only is more cost effective and convenient for (some) people ignores the potential for Digital Exclusion, but perhaps more significantly, they restrict the opportunity for unfiltered scrutiny and challenge. If organisations were truly focused on convenience and interested in increasing attendance, they would hold hybrid meetings at more suitable times.
It’s one of my concerns with regards to Nationwide Building Society. For an organisation that prides itself on fairness, and being member-owned, a virtual-only AGM held mid-morning on a Wednesday in the middle of the summer holidays is a strange choice.
Only 300 people attended last year, down from in person AGMs in the early 2000s that attracted multiples of that amount. 300 people is less than 0.002% of the 16 million members. If Nationwide can organise hybrid voting, why can’t it organise an hybrid meeting?
My Election Address and the Quick Vote
I have the opportunity to include an Election Address (PDF version) of no more than 500 words in support of my candidacy under Rule 22 of Nationwide’s memorandum and rules (see: Process to nominate and elect a Director of Nationwide). The Society Secretary has therefore asked me to deliver this to him at the Society’s headquarters, accompanied by the nominations I have collated, and a deposit for £500. The deadline to submit all of this is the Society’s financial year end (which was the 4 April in 2024, and is now the 31 March in 2025 – see LSE notice, FCA Mutual Register).
As the deadline approaches, there are a few uncertainties at this point:
- Have I been successfully nominated? (The nominations I have received and have submitted are subject to validation by the Society to ensure that I have received correct nominations from at least “250 qualified two year members.” Over 600 people have sent me their details wishing to nominate me, and I have submitted all of these for the Society to validate.)
- Will I be a Board recommended candidate or not? (This influences member voting, particularly when the Quick Vote mechanism is used.)
- Will the Society use the controversial Quick Vote mechanism at this year’s AGM? (The Society has used this for the last few years, but none of these elections were competitive.)
- Will the Society increase the number of board seats available i.e. to what degree is this a competitive election? (Note that there were two instances in living memory when a member-nominated candidate beat / unseated a board-appointed candidate.)
The election statement is distributed with the ballot pack (see last year’s “Who are you voting for?“), sent by post and available electronically, depending on members’ communication preferences. Providing a statement as a candidate is optional, but I think necessary, so that members can assess the candidates, what they stand for etc. Given the uncertainties above, however, it is hard to write the optimal, catch-all statement..
My election result likely rests heavily on the board’s recommendation, and the use of the “Quick Vote” mechanism, a controversial tool used by some organisations, not just Nationwide. The other dimension to this is how many board seats are being competed for out of the available candidates.
| Board Recommended | Not Board Recommended | |
| Quick Vote | Very Positive for me | Very Negative for me |
| No Quick Vote | Positive for me | Negative for me |
The Building Society Members Association (BSMA) is opposed to the use of the Quick Vote. It effectively encourages members to appoint the chair as their proxy, who votes on their behalf, following the board’s recommendations. Most members appear to use this mechanism: last year’s votes carried at a 95%+ approval rate. See the past history of election results I compiled here: Why I believe access to the Nationwide member register is needed.
There was significant concern raised regarding the use of the Quick Vote by the National Trust, as recently at last year, e.g.:
- National Trust blocks referendum on voting system which ‘stifles debate’ (The Telegraph, October 2024)
- National Distrust: The end of democracy in The National Trust (Prosperity Institute, March 2024)
- Quick Vote is a ‘North Korean approach’ to democracy, claims Lord Sumption (Restore Trust)
However, as this is potentially the first competitive election for Nationwide building society, since the Quick Vote mechanism was introduced (the last time a member-supported candidate stood for election was Alan Debenham, 20 years ago, in 2005), it is not clear to me how the society will manage this year’s ballot. It’s entirely possible that I – or another member nominated candidate – will be competing against the board-appointed candidates, noting the convention that board directors need to be re-elected every year, and that three directors, who were co-opted during the year, need to be elected for the first time.
As a result, I am submitting different versions of my election statement to cover whether there is, or is not, a Quick Vote in place. I’m suggesting the red text in the below is removed if the Quick Vote is suspended.
James Sherwin-Smith
Independent non-executive director
A member-nominated candidate seeking election as a Member Representative
Skills and experience
James Sherwin-Smith is an experienced financial services and payments executive, and a director of several UK companies. James currently advises and invests in early-stage UK businesses in the financial technology and payments sectors.
He was previously CEO of Growth Street, a FCA regulated company that lent to small businesses in the UK. More recently, he was General Manager of Vocalink International, a UK company that builds and operates central payment systems for national economies across the world. He was a member of the executive team responsible for the successful integration of this business, following the acquisition of Vocalink by Mastercard.
Election statement
I am standing as a Member Representative for election to the Board of Directors. I believe representation by members and for members is a necessary ingredient for any mutual society. If you agree and want me elected to the board to represent your interests as a member, it is important that you vote only FOR me, and AGAINST all other candidates. Selecting other candidates may prevent me from being elected due to the “Quick Vote” mechanism.
Nationwide is owned by its members, and yet none has any influence on decisions made, as demonstrated by events surrounding the recent acquisition of Virgin Money, and the “Fairer Share” & “Big Thank You” payments awarded to only a subset of the membership.
Members of a mutual society must be able to hold the management and board to account, and their collective actions should deliver value for current members. Accumulating larger and larger profits, behaving like a bank, and building a bigger, more complex business for the future is of small benefit to existing and loyal members.
Nationwide should focus on making home ownership more achievable and affordable – the very purpose for which building societies were originally created. Nationwide must remain competitive, not only with high street banks but also with other building societies, and new, challenger brands.
I questioned the recent announcement of a 50% increase[1] to Nationwide members’ credit card interest rates when the Bank of England base rate was falling. Subsequently, the BBC disclosed[2] that members could choose to remain on their current rate for their existing credit card debt. New cards are now priced at the highest margin over base rate for over 15 years[3].
The Society has not held a competitive election of board directors since 2005, and not since the introduction of the “Quick Vote” mechanism. I believe this is not conducive to the way a mutual society should operate.
Please vote FOR me only. To learn more, please visit:
https://James4Nationwide.co.uk
[1] Nationwide hikes credit card rates by up to 50%, Daily Mail, 6 March 2025
[2] Watchdog on The One Show, BBC, 19 March 2025
[3] Is Nationwide becoming more like a bank? A case study of credit card pricing, James4Nationwide.co.uk, 5 March 2025
The Big Nationwide “Thank You”: £50 for what and why?
Nationwide has announced this week the “Big Nationwide Thank You” – a £50 one-off payment to eligible members. This is entirely separate to the recent annual (but not guaranteed, or clearly defined) Fairer Share Payment.
This “thank you” payment is another example as to why members should be more engaged, and members’ perspectives better represented, at a board and senior management level. Members’ should be looking beyond the £50 windfall about to land in their account, and think about whether the figure is right, whether it could have been used in a better way (e.g. better mortgage rates), or should be kept in reserve for future needs given current economic uncertainty and the amounts being spent on the acquisition and integration of Virgin Money.
This is another example of why I am requesting that members nominate me to stand for election to the board of directors of the Nationwide Building Society, so that I can better represent member perspectives.
Why the extra one-off payment?
What is The Big Nationwide Thank You?
On 1 October 2024, we completed the purchase of Virgin Money, becoming an even stronger force in UK banking. This was made possible by the financial strength Nationwide members helped us build.
To say thank you, we’re giving over 12 million of our members £50 each as part of The Big Nationwide Thank You. Over £600 million in total.
What’s the running total for the Virgin Money acquisition?
In effect, Nationwide has now spent the following on the Virgin Money acquisition
- £2,900 million to buy Virgin Money shares from Richard Branson, former NAB (mostly Australian) shareholders, and current / previous managers (e.g. Debbie Crosbie, the Nationwide CEO who was the Virgin Money COO)
- £250 million, plus a further £15 million per year, to Richard Branson’s Virgin Group for the right to use the “Virgin Money” brand – which Nationwide expects to close down in due course
- £650 million capital injection into Clydesdale
- £100 million estimated in fees and expenses (advisors, bankers, external public relations, lawyers etc.)
- £600 million to members as a “thank you”
- Higher pay for management (see Resolutions 2 and 3 passed at the last AGM)
- A considerable amount of marketing spend (online and in print) to promote the “thank you” payment – perhaps in an effort to curry favour with news editors.
Plus, still to come: the costs of integration and restructuring the combined Nationwide Group at an estimated further £1,000 million.
So the cost of the Virgin Money acquisition, given the above, is approaching £5,500 million. Some of that amount might be funded out of future profits of the combined Nationwide Group. But the largest proportion is clearly being funded out of reserves, i.e. members’ equity in the business, as the deal was not financed by debt.
The Virgin Money deal was effectively a large transference of members equity to Richard Branson (via the Virgin Group), and Australian fund management customers, who held a large proportion of the Virgin Money plc stock following the demerger of the Clydesdale and Yorkshire Banking Group (CYBG) from National Australia Bank. And while Virgin Money plc shareholders were able to vote on the deal (to sell their shares at a 40% premium to market value), Nationwide members were blocked from a vote by the Nationwide board.
Thank you payment just raises more questions
I am pleased to see that Nationwide is listening to member feedback, noting the negative comments received from members excluded from the “fairer” share payments in the past. This one-off “thank you” payment is more equitable in it’s distribution to members: the “thank you” payments will be paid to the 70% of all members (12m out of the now 17m), unlike last year’s “fairer share” which reached only 25% of members (4m out of the then 16m).
I hope this is a sign that Nationwide are reconsidering the criteria for the currently annual (but not guaranteed or pre-defined) “fairer share” payment so more members participate in the future distribution of profits. However it’s possible that the implementation of the FCA Consumer Duty regime is driving these changes, after a high volume of complaints from ineligible members who didn’t receive “fairer share” payments.
A number of questions remain:
- Why is Nationwide doing this, and why now, given the economic climate and lower Group reserves given spending on the Virgi Money acquisition.
- Were members consulted? It’s clear people are being asked about it _after_ the event via the Member Voice platform.
- Do management have more certainty around future profits?
- Will the integration be shorter or cheaper than anticipated?
- Or is an effort to appease members ahead of breaking some bad news?
- Or a response to recent criticism about Nationwide increasing credit card interest rates at a time that Bank of England base rates are coming down?
It has been a long standing concern of mine (and others) that the integration of Nationwide and Virgin Money will be difficult, expensive and time-consuming. It is likely therefore that the quality of products and services delivered by the bigger Nationwide Group will suffer, as more management time is spend on integration rather than improvements to the core banking / society operations.
What about the alternatives?
Taking a step back, is making this payment the right mechanism to distribute “extra cash” i.e. pay “dividends” on members “shares” in the building society? Is now the right time to do that?
Making identical payments to eligible (some, not all) members, instead of setting better interest rates, is effectively a transfer of wealth from the most indebted customers (with bigger mortgages) or richer customers (with larger savings accounts) to customers with minimal balances, as eligible members are all receiving the same amount, despite different balances in their accounts.
Further, is a uniform £50 / £600 million total giveaway the right thing to do during a period of significant economic uncertainty? Would it have been wiser to keep this money in reserve?
Or should a building society be focused on offering better mortgage rates instead, during an ongoing cost of living crisis? Wouldn’t that have been a better use of the estimated £5.5 billion of members’ money spent on Virgin Money as per the above?
It is unclear how, or if, the Society has consulted upfront with members on how it is spending the society’s reserves (i.e. members’ equity). It has a habit of doing something first, and then asking / ignoring members afterwards (cf. see recent Member Voice below).
What we do know is that the Society believes it knows better than the membership (that it is supposed to serve, and who ultimately own the Society). This “Thank You” payment serves as yet another example of this, following the Society avoiding giving members a vote on the Virgin Money acquisition last year.
I’d be interested to hear what other members have to say. Comments are open below, or you can email me direct james@james4nationwide.co.uk (or see Contact page for more options).
Is Nationwide becoming more like a bank? A case study of credit card pricing
Disclaimer: Nothing herein is financial advice. Please do your own research and make your own, informed decisions when selecting a financial product or service.
I was asked by Simon English, ex City Editor of The Standard (and Nationwide member) last week what I thought of Nationwide building society’s decision to increase the interest rate on its credit cards for existing members.
He subsequently wrote an article that was published today (5 March 2025) in the Daily Mail: Nationwide accused of ‘rampant profiteering’ as it hikes credit card rates by up to 50%
Simon’s initial question was this:
“Why has my credit card interest rate gone up from 15.9% to 20.9% when Bank of England base rates are going down?”
The chart above shows how the average APR (Annual Percentage Rate) for new Nationwide credit card applications (aka “front book” customers – see longer explainer below) has changed over the last 15 years (the red line). There was a sudden increase a year ago at the start of 2024 to 24.9% – which is both the highest APR in the last 15 years, AND the highest average spread (the yellow line) over the Bank of England base rate (the blue line).
Two possible reasons for this increase by the Society are:
- The Bank of England base rate had steadily increased since early 2022 , so the spread between APR and base rates was being eroded, impacting profitability. Base rates have only been reduced a small amount since peaking in early 2024. Instead of slowing increasing rates, the Society waited and made one single big change (less costs to the Society of making incremental changes, less death by a thousand cuts for members).
- The Virgin Money acquisition was announced early 2024. A 24.9% APR is consistent with the Virgin Money front book pricing.
Trying to second guess which of these two factors weighed more heavily in the decision is hard to do from the outside. But the outcome is undeniable: instead of Virgin Money new applicants being offered a reduced rate to match Nationwide long term margins of c 16% i.e. extending the benefits of mutuality to Virgin Money customers (Virgin Money is no longer a shareholder owned bank), Nationwide member credit card rates have been increased to align with Virgin Money rates, prior to its acquisition by Nationwide Group.
This is why I called it out as “rampant profiteering”. It runs contrary to the narrative provided by Nationwide’s CEO and Chairman at the time of confirming the acquisition was proceeding:
“In March 2024, we confirmed our offer to buy Virgin Money. I believe this deal offers an exciting opportunity to create a more diverse business that delivers even more value to our members and will strengthen Nationwide financially. We continue to make good progress on our plans and expect to complete the acquisition in the fourth quarter of 2024, subject to regulatory approval.”
Debbie Crosbie, Chief Executive
“The acquisition of Virgin Money will bring the benefits of mutual ownership to more people in the UK and will enable us to provide further value to customers and members through its products and services.”
Kevin Parry, Chairman
The data for rate changes to existing credit card customers is harder to come by, as different customers signed up to different offers at different times, and it’s not transparent how these variable rates have been adjusted over time. But it looks like the 5% increase that impacted new customers 12 months ago, is only now being applied to existing customers.
Simon’s rate on his existing Nationwide card has just been increased from 15.9% to 20.9%, while new customers have to pay 24.9% currently. So more price rises may be “on the cards”. However Nationwide will also have balance the potential for extra margin vs losing customers / members altogether – the more the Society puts up the prices to increase profit margins, the more likely it is that customers / members will shop around and look for a better deal elsewhere.
For more detail about credit card pricing and the range offered by Nationwide over time, please see below.
I hadn’t looked at the Nationwide credit card offerings before, so I decided to do some research into the history of credit cards at Nationwide building society, and compare the Nationwide offers to those of the newly acquired Virgin Money, which is now part of the Nationwide Group.
Why do credit card offers have different rates?
The first thing to note is that banks and building societies issue different products (or offers) over time. Different considerations are taken into account when designing a credit card offer, and these change over time, e.g.
- the Bank of England base rates
- the risk that customers cant pay back their debt
- the market conditions i.e. competition and regulation
- the bank / building society’s costs
- the strategic / profitability outlook for the institution
So the credit card offer an existing customer signed up to 5 years ago is not necessarily going to be the same as the offer a new applicant receives today. This is often described as “front book” (i.e. new applicants) vs “back book” (i.e. existing customers) pricing, where “pricing” is a composite of the different parameters that make up the offer – not just the ‘headline’ interest rate or APR (Annual Percentage Rate), but also the fees involved, the size and duration of any introductory offers, any perks etc.
Also note that under FCA rules for financial promotions, credit card offers that carry a “Typical APR” means that the offer must be available to at least 66% of applicants. Why might some applicants get a different APR? Some financial institutions employ risk-based pricing i.e. those customers that are assessed as having “good credit” (more likely to repay their debts) get a better offer than other customers who are deemed less good / bad. And those with very bad credit may have their application rejected altogether.
Nationwide’s credit card offers have changed over time
Nationwide “front book” pricing (today)
If I log into my Nationwide app on my phone, click Products at the bottom, and then select Credit Cards – I am presented with two credit card offers:
- Member Credit Card – Balance Transfer (BT) Offer, and
- Member Credit Card – All Rounder (AR) Offer
These “front book” offers are very similar: both cards are issued by VISA and the card images look identical. They both carry a headline rate of “24.9% APR Representative (variable).” Both cards incur a 1.5% fee (minimum £5) if you’re planning on transferring your unpaid credit card balance from another card to Nationwide within 90 days of account opening. Transfers made after that date will be subject to a 2.4% fee (still a minimum £5).
The only notable differences are the in the introductory offers that each offers
- 0% [interest] on balance transfer offers for 18 months, 0% [interest] on purchases for 3 months, versus
- 0% [interest] on balance transfer offers for 15 months, 0% [interest] on purchases for 15 months.
So the first “BT” card is good if you’re planning on transferring a balance, as you get 18 months interest free (but you will pay a one-off balance transfer fee of 1.5% or 2.4% depending on when you make the transfer). But it’s not great if you’re planning on using the credit card to make lots of purchases after the month 3. If you don’t have a balance to transfer, or are going to be spending consistently on the card and not paying the full balance at the end of each month, the second “AR” may be a better “All Rounder” offer for you.
Virgin Money “front book” pricing (today)
It’s interesting to note that the headline “24.9% APR Representative (variable)” that Nationwide offers to members who want to apply for a credit card today, is the same headlone interest rate for the Virgin Money credit card offers, which mostly carry “Representative 24.9% APR (variable)”. The words are in the same order, but the meaning is the same.
The Virgin Money offers are slightly different to Nationwide’s however:
- Up to 29 months at 0% interest on balance transfers made in the first 60 days. Fees apply.
- 12 months at 0% interest on money transfers made in the first 60 days. Fees apply.
- 3 months at 0% interest on spending.
2) All Round offer doesn’t share the details of what the typical offer is – perhaps because it depends on your credit / risk assessment.
Comparing “front book” pricing of today vs. yesteryear
Thanks to the Wayback Machine Internet Archive, it’s possible to compile a list of the prior Nationwide credit card offers by looking back in time to what offers were promoted on Nationwide’s website. (Someone has also created a visual archive of some different debit and credit card designs.)
What this shows is that Nationwide has experimented quite a bit with different credit card offers over time:
- A single “gold card” covered both the BT and AR needs until 2011
- Two different offers existed from 2011 onwards to cater to BT and AR needs
- The “Select” card was introduced c. 2014 (this used to offer cashback on purchases)
- There were 5 different offers were available simultaneously in 2015: Select; Purchase offer; Long term BT; Select longest combined; Low fee BT
- The “Nationwide” card was introduced in 2016 to cater to BT and AR needs, alongside the Select card
- The Select card was withdrawn c 2020, and the BT and AR offers remained, as per today
This also allows a comparison of the average APR of the available credit card offers over time, and how these compare against the prevailing Bank of England base rate at that point in time.
The bottom line
This shows that over the last 15 years, today’s front book APR of 24.9% has reached an all time high.
It also shows that while BoE base rates have increased recently, and now fallen back a bit, the difference between front book pricing (measured by APR) vs the BoE base rate is now the largest spread at any point in the last 15 years (24.9% – 4.5% = 20.4%).
Survey of Nationwide members shows plurality would be happy to receive an email or letter from a candidate to the board
Find Out Now surveyed over 2,000 Nationwide members (who hold at least £200 with Nationwide) on the following question:
The board of Nationwide building society doesn’t currently contain any directors directly nominated by the membership.
A member wanting to stand for election has applied to contact members to seek their support.
If the regulator allows this, would you be willing to receive an email or letter from the candidate?
Results
- Yes (42 per cent)
- No (30 per cent)
- Don’t know (28 per cent)
Excluding ‘Don’t know’ respondents, the result becomes:
- Yes (58 per cent)
- No (42 per cent)
About the Survey
Find Out Now polled 2,002 Nationwide members (who said they bank with Nationwide and hold at least £200 with them) from across the UK online between 24th – 25th February 2025.
Find Out Now is a member of the British Polling Council and abides by its rules.
For further information or to request a poll or survey, contact us at ask@findoutnow.co.uk
Download the survey results (PDF).
Why I believe access to the Nationwide member register is needed
Following the announcement to my professional network on LinkedIn regarding next week’s oral hearing, which linked to the text provided by the FCA, one commentator asked me this:
“Why do you need access to the full list (lots of personal data), rather than having Nationwide post out your election comms to the members directly?“
Question posted on LinkedIn
It’s a great question, and so I have pasted my answer back here, broken into sections with evidence in support of my arguments..
Access to the register is necessary in my opinion (the FCA is expected to determine this after the hearing next week) to secure nominations to be on the ballot, and to raise awareness of my candidacy ahead of it.
If I am nominated, members will then receive an election pack including information about the candidates, which would then include me.
22. Notice of Meetings and Postal Ballots
Nationwide Memorandum and Rules (1 September 2024)
(a) Any notice of meeting shall:
…
(v) be accompanied in the case of an election of Directors by any election
address of not more than 500 words or other details concerning the
candidates required by the legislation;
However, turnout for the elections / AGM is very low. Less than 4% of eligible members vote.
The most for and against votes recorded was for Debbie Crosbie:
Votes for 613,561 (96.1%)
Nationwide 2024 AGM results
Votes against 24,915 (3.9%)
Votes withheld* 7,051
Votes for + against = 638,476, which is less than 4% of the 16+ million members eligible to vote.
Member attendance at the virtual only AGM was just 300 people last year. This historically low level of member engagement is the principal reason for my candidacy.
See this extract from the 2024 AGM transcript – where the chairman replies to member’s question on AGM attendance. It’s perhaps worth noting that 2022 was during the COVID-19 pandemic.
How can we justify saying an online-only AGM gets ten times as many
Question from Mr Castle, a Nationwide Building Society member, at the 2024 AGM
members to join compared with an AGM of the past? He said I mentioned 194
being online today – I did say that indeed, we’re actually now about 300 people
online – yet a physical AGM held at the ICC in Birmingham around 2005 had
around 700 people in attendance.I wasn’t here in 2005 but I’m very happy to take your number, Mr Castle. What I do
Answer given by Kevin Parry, Chairman of the Nationwide Building Society, at the 2024 AGM
know is the last time we invited people to attend in person was in 2022 and we only
had 32 people that turned up in person, apart from our own staff. So back in 2005 we
didn’t have the same options for online meetings as we do now and so we are of the
view that in the current environment, with the better technology that exists now that
wasn’t nearly as good in 2005, this is giving us high attendance for our AGM. So
I hope that explains the difference.
And most members choose to use the “quick vote” mechanism which means the board recommended candidates and resolutions are typically passed at a 95%+ approval rate.
Data from past Nationwide AGM results (2006-2024) shows that the approval rate (blue line, right hand axis on the graph below) has only once dipped below 95% for a board candidate. The number of votes cast however, has been reducing over time (red bars, left hand axis), from over 1.5 million in 2008 to 0.6 million in 2024.
This trend of fewer votes is opposite to the increasing number of members eligible to vote. There are currently 16+ million members of the society – 20 years ago it was 11+ million members , and in 2008 it was 14 million (see corresponding year’s annual reports).
Put another way, member turnout was 1.5 / 14 million = 11% in 2008, whereas in 2024 it was just less than 4%.
I need 250 nominations to be on the ballot, from eligible members.
The bar for nominations was raised 5x (i.e. from 50 to 250) by Statutory Instrument 1999 No. 3032, The Building Societies (Nominations for Directors’ Election) Order (1999), following the various attempts to de-mutualise the building societies in the 1980s and 90s. [Nationwide came close at the 1997 AGM, when Resolution 3 “To take steps to convert to PLC status” was defeated by just 33,710 votes (For: 1,101,887 votes, Against: 1,135,597 votes), i.e. 49.25% for vs. 50.75% against the resolution.]
31. Nomination for Election of Directors
Nationwide Memorandum and Rules (1 September 2024)
(a) Any individual who will be at least 18 years of age at the date of election and is not
prohibited by law from being a director may be nominated for election as a Director.
(b) A nomination for election as a Director may be made by 250 qualified two year
members. The nomination must:
…
The eligibility criteria and nomination process make it difficult, arguably impossible, to find the right members, in sufficient volume, through other methods.
It’s perhaps worth noting that, as per the graph below:
- Directors of the society were elected to three year terms until 2011, now Directors have to be re-elected every year. (Red bars below show successfully elected Board Appointed Directors.)
- There hasn’t been a single Member Supported candidate on the ballot since 2005. (Yellow bars signify unsuccessful Member Support candidates)
- The last Member Supported candidate to be successfully (re-)elected was in 2001 (Green bars) – this was Paul Twyman, who served on the board of the Anglia (pre-merger) and Nationwide for 20 years.
- Board Appointed candidates have been unseated by successful Member Supported candidates in the past as part of a competitive election (Blue bars): Michael Holloway was unseated by Sheila Heywood in 1988; and Sir Leonard Peach was unseated by David English (a former Nationwide manager who was made redundant) in 1993. Learn more about the Member Supported candidates in my post: Rebels with a cause: Standing on the shoulders of giants.
More info here on the criteria, form etc: james4nationwide.co.uk/nominate
Please don’t hesitate to contact me directly if you would like to discuss further.
Oral hearing called by the FCA re member register access
The FCA have agreed I can share the following information:
An oral hearing will convene on the 26 February 2025 at 11am at 12 Endeavour Square, London, E20 1JN. The hearing will be in-person only and will last approximately 90mins.
This hearing is to determine an application to obtain a copy of the register of members of Nationwide Building Society made under paragraph 15 to schedule 2 of the Building Societies Act 1986. Both applicant (James Sherwin-Smith) and Society have provided written representations as per the process. The applicant and society have exercised their statutory right to request an oral hearing.
The hearing will be held in public, unless an application is made by either party to hold it in private. Any such application will be determined on the day of the hearing itself.
Because the hearing is going to deal with the issue of access on the day itself, and capacity in the hearing space is limited, it is important to indicate in advance your intention to attend. Registration is not a guarantee of entry.
In order to register, please email: mutual.societies@fca.org.uk*. Using the subject heading “Oral Hearing February 26”. This must be received before the 25 February 2025.
Learn more about how to nominate me to stand for election to the board of Nationwide.
I will write a further update about a member’s statutory right to access the register of members of a mutual society in a later post.
* Email address corrected at 15:00 on 24-Feb-2025 by JSS: previously “mutuals.society@fca.org.uk” (as per the original text provided to me by the FCA), however this email address has been reported to me as undeliverable.
Recent governance changes at Nationwide
Following the AGM last summer, and the completion of the Virgin Money acquisition in October, it’s worth noting a few recent changes from a governance perspective.
- Updated Memorandum and Rules of the society
- Nationwide Group now includes Virgin Money following completion of the acquisition
- Changes to the Nationwide board
Updated Memorandum and Rules of the society
The updated Memorandum and Rules have now been published on the society website with an effective date of 1 September 2024. Pages 4-10 of the Notice of AGM 2024 explained the changes. I have archived a copy of the previous version of the Memorandum and Rules (published 1 September 2020) for members who wish to compare the two.
At a later date I have it in mind to map the evolution of the rules since the society was formed.
Nationwide Group now includes Virgin Money following completion of the acquisition
The Virgin Money acquisition was completed on 1 October 2024, as confirmed in this note from the chairman. The interim financial reporting for the 6 months to 30 September was published on 26 November 2024 – with separate reports published for Nationwide building society (results, presentation), Virgin Money UK plc (results) and Clydesdale Bank plc (results). It is my understanding that Virgin Money UK plc and its subsidiaries are now subsidiaries of Nationwide, and in effect the board of Virgin Money now reports to the board of Nationwide (which governs the society, and so the enlarged group as the acquirer).
Around the time the acquisition completed, Chris Rhodes took over as CEO of Virgin Money, with David Duffy leaving the group. As a result, Muir Mathieson was promoted to CFO of Nationwide – he was previously Deputy CFO and Treasurer.
Many of the headlines following the publication of the interim results highlighted the higher than forecast gain from the acquisition (£2.3bn vs £1.5bn) e.g. Nationwide’s £2.3bn takeover gain prompts criticism of Virgin Money bosses (The Guardian). However the Daily Mail/This Is Money drew attention to Nationwide’s £650m support for Virgin Money i.e. members’ equity was used to increase the capital strength of Clydesdale Bank, a subsidiary of Virgin Money UK.
I await the results for the year ending 4 April 2025 with interest, anticipating these will show the consolidated position for the group, and may set further expectations regarding the integration.
Changes to the Nationwide board
Some new directors have been appointed to the board. As is customary, it is expected that these members will stand as candidates for election at the 2025 AGM. You can learn more about these individuals on the Board and Executive Committee section of the society’s website
- Muir Mathieson, Chief Financial Officer (6 September 2024)
- Anand Aithal, Independent Non-Executive Director (appointed 1 October 2024)
- David Bennett, Non-Executive Director (appointed 14 November 2024) – also serves Chairman of Virgin Money UK and Clydesdale Bank
Chris Rhodes has left the board of Nationwide (after serving over 15 years), as he vacated the Nationwide CFO role to become the CEO of Virgin Money (appointed 1 October 2024)
The chairman, Kevin Parry, is now the longest-standing director of the board. He was appointed 23 May 2016, so is approaching the end of his nine year appointment, unless this is extended.
3.6 Appointments to the Board shall ordinarily be for a period of up to nine years, provided the director still meets the criteria for membership and is re-elected by the Society’s members. However, if there is a compelling commercial imperative, the nine year period may be extended for a limited time.
Nationwide Building Society Board Terms of Reference
Tracey Graham, the Senior Independent Director of Nationwide, has also joined the board of Virgin Money as a Non-Executive Director (appointed 23 January 2025).
I am compiling a history of the changes to the board composition of the society as part of my research. I will share this once it is complete.
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 be 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.
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:
- 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.
- The importance of brilliant Execution (best measured by organic growth)
- Why Membership is a key concept and must be kept vital (best measured by a high proportion of customers being active members)
- 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
- Good Governance is essential given the unique “customers are the owners” model and “one member, one vote” principle (best measured by member engagement)
- 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)