Nationwide: pay us like us bankers – just don’t hold us accountable like bankers
Kalyeena Makortoff, writing in The Guardian today, has highlighted Nationwide’s blatant double standard when it comes to executive pay.
Nationwide is arguing that its executives should be paid in a comparable way to executives at large UK banks, but as Nationwide is a building society, members should not be granted a binding vote on the remuneration policy (as is the case at large UK banks).
Many members would baulk at the idea that a mutual society CEO should have the opportunity to earn £6.9m in a single year (a recent subject of Private Eye’s number crunching). Nationwide’s CEO is already the most highly paid building society CEO in history.
Some members may even be motivated to vote AGAINST the remuneration report and remuneration policy at (or ahead of) the upcoming AGM. However, these votes are advisory and non-binding i.e. the board and society can choose to ignore these.
The Guardian article neatly portrays Nationwide as a building society taking advantage of a loophole. Rather than acting like a mutual society, and in the interests of fairness, by putting remuneration to a binding vote of its owner-members, the society instead is arguing that as it’s not a listed company, and has no shareholders, it’s not required (by law) to offer members a binding vote. So instead of doing the right (i.e. moral) thing, it side-steps it. The double-standard is astonishing. Nationwide is effectively saying “we’re not a bank, but pay us like bankers – just don’t hold us accountable like bankers.”
Nationwide is effectively saying “we’re not a bank, but pay us like bankers – just don’t hold us accountable like bankers.”
James SHerwin-Smith, james4nationwide.co.uk
Questions members may want to consider before voting, or ask at the AGM
I also have to question why Nationwide’s board thinks that its executive should be paid in a comparable manner to those working at shareholder-owned banks. For example:
- £6.9M for the CEO is 280x what a junior employee is paid. How is this appropriate?
- Nationwide is not listed, so the executive management task is lower, and the individuals are less accountable (remuneration votes are non-binding). Why should executives be paid similarly to a listed company?
- Nationwide is building society, and as such it is a much simpler and less risky business than a bank e.g. it does no/very little wholesale, corporate or investment banking (and nor should it). Why should executives be rewarded similarly to more complex and riskier banks?
- Nationwide is a mutual. Why are performance benefits not accruing to members rather than executives?
The Quick Vote props up the approval rate
Note that Nationwide has offered an advisory vote on remuneration since 2003. It instigated the Quick Vote in 2006 (which encourages members to give their vote to the chair). The approval rate immediately jumped from <75% the year before to almost 95%, and has remained >90% most of the time.
Since the Quick Vote was introduced, member turnout has been in decline
Note that since the introduction of the Quick Vote in 2006, despite increasing membership, the number of members that turn out to vote has been in long term decline. Why vote when the board is almost guaranteed to get its way? See Nationwide AGM 2025: the illusion of governance and the futility of membership for more.
Debasing the membership (part 1): Nationwide’s virtual-only AGM
In the last few days, Nationwide members will have received the Chairman’s letter 2025, inviting members to vote and attend this year’s virtual-only Annual General Meeting (AGM).
One claim that stood out for me and I wanted to check its veracity:
“Since we made the meeting online, we’ve had the highest member attendance for over 10 years.”
The executive summary: it’s doubtful whether this statement is true. It is more likely that there was higher member attendance when the AGM was run (for 20+ years) with parallel in-person and online formats — what most building societies refer to as the “hybrid” format.
Worse, despite stated desires to drive “greater engagement” from the membership, a switch to a virtual-only AGMs is likely a mechanism deliberately chosen to restrict member-led challenge and action, and will likely result in the opposite outcome. Virtual-only attendance of the AGM in 2024 was already down 14%, the year after it’s introduction.
1. The Nationwide AGM has been available “online” for at least 25 years (started c. 2000)
It has been possible to attend the Nationwide AGM online since at least the year 2000 – see this archive page which states the AGM “was broadcast live on the Internet, is now available as an archived webcast” (sadly the link to the archive no longer works). I’ve not been able to find any information on how many members have historically joined the meeting online, but I’m aware of viewing facilities being setup in branches across the country to allow members to join who were unable to attend in person, but didn’t have the necessary technology or know-how to join a virtual meeting unaided.
2. In-person attendance varied depending on the AGM venue
In-person AGM attendance was the norm from the very origins of the society, and AGMs were typically held in London. At the end of the last century, the Royal Lancaster hotel was the preferred venue. I’ve heard apocryphal stories from this era of members availing themselves of anything “consumable”: from plates of biscuits being tipped into handbags, to the WCs being stripped of all toilet paper.
Whether related or not, from 2004 the society experimented with taking the AGM on the road to various regional convention centres.
The result: the more “regional” the venue, the lower attendance. In one case (Gateshead) the attendance was less than 100 members. Attendance was clearly strongest when the AGM was held in London (probably due to population density, attractiveness of location, and the ease of transportation), with in excess of 500 members attending each time it was held in the capital.
3. 2020-21: Covid years and a rule change
Covid protection measures, lockdowns and social distancing meant members could not attend the AGMs in 2020 and 2021, which were virtual-only affairs by necessity. A small number of member-colleagues present ensured quorum was met.
The society tabled (and the members approved) a special resolution at the 2020 AGM to adapt the society’s rules given the exceptional circumstances (a global pandemic).
To quote the then chairman, David Roberts:
The fifth resolution is a special resolution to amend the Rules of the Society as stated in the Notice of AGM. This resolution is a direct consequence of the coronavirus pandemic, which has highlighted the need to update our Rules for the benefit of members.
David Roberts (Chairman) speaking at the Nationwide Building Society Annual General Meeting, 16th July 2020
The first change we are proposing is to be able to hold meetings allowing both a physical and digital presence of members. Although this rule change will help us at times like the present, we believe that giving members the option to attend meetings online as well as in person will increase member engagement, allowing those members who can’t easily travel to a meeting in person to attend digitally. I would like to stress that, unless there are exceptional circumstances, the intention will be to hold a combination of both physical and online meetings and not an exclusively virtual or online meeting.
4. 2022: Nationwide’s first (and only) “hybrid” AGM?
The society’s press release announcing the results of the 2022 AGM hailed its “first hybrid AGM”:
This year, the Society held its first hybrid AGM with members able to attend in person at Nationwide House [Swindon HQ], and able to fully participate online, including voting and asking questions by video or text. Members were able to submit questions in advance of the meeting by email and post.
Given members had been able to join the AGM online for over 20 years by this point, the “first hybrid” claim is a little odd. The only distinction that could perhaps be drawn is the level of participation i.e. the ability to ask questions by video, and vote live in the meeting, given online voting and submitting questions in advance had been available for years, if not decades.
5. 2023 to date: Virtual-only AGMs
One year on from its first hybrid AGM in 2022 (and just three years on from David Roberts’ 2020 AGM pledge to the members that “exclusively virtual or online” meetings weren’t the intention), the new chairman, Kevin Parry, introduces the virtual-only 2023 AGM to complete a classic banking bait-and-switch:
This AGM is fully online and builds on our experience from last year. We discovered then that many more people attended online than made it in person, almost ten times as many in fact, and they were just as able to ask questions and vote as the people who were in the room.
Kevin Parry (Chairman) speaking at the 2023 AGM, 19th July 2023
Further, in response to a member question from the (virtual) floor:
…the question I think substantively: why are we holding it virtually rather than in
person? It’s to allow participation. Currently, I’m informed that we’ve got over 350
people online, that’s the biggest attendance we’ve had in eleven years, and so it is to
allow greater engagement with people.
What was Parry’s comparison for in-person attendance? During Covid? Holding the AGM in Gatesehad?
Further, if AGMs attract 10x the number of members online than in person, then it is hard to defend the claim made in the chairman’s 2025 letter that “we’ve had the highest members attendance for over 10 years”, as a combination of in-person and online attendance must have been greater in all years bar 2021.
If online members number 10x the in-person count as per the chart above, the chairman’s claim simply isn’t credible. Further, suggesting virtual only AGMs allow “greater engagement” defies logic: how does shutting the door to in-person attendees, excluding those that might not have the digital knowledge or capability at home, increase participation?
The path chosen by Nationwide appears to be part of a multi-step strategy to reduce participation and marginalise members:
- Hold the AGM at unpopular times and in increasingly remote corners of the UK to reduce attendance
- Use the pandemic as an opportunity to change the rules of the society
- Restrict attendance to a virtual-only format, leveraging the rule change and the justification of lower in-person attendance brought about by a global pandemic
- Use the virtual-only format to exclude some members, restrict transparency and more actively manage the Q&A session.
- Further reduce member participation, engagement and power (e.g. Virgin Money disenfranchisement).
6. Nationwide is the only building society in the country to operate virtual-only AGMs
There are 42 building societies in the UK according to the Building Societies Association. Nationwide stands alone by refusing in-person AGM attendance. All other societies either offer in-person only or hybrid meetings. Further, in an effort to encourage member participation, they tend to schedule these at member-friendly locations and times.
7. Virtual-only AGMs worsen member participation and engagement
Digital exclusion issues aside, virtual-only AGMs support a degree of stage-management by the society’s board against the members:
- Instead of questions being answered in the order they are raised at an in-person AGM (i.e. queued at the microphone), questions submitted online can be vetted, re-interpreted and prioritised at the command of the chair.
- Questions can be pushed down the list and go unanswered in the time available.
- Members are denied full transparency into the questions other members are asking.
- There is no feedback mechanism: members’ can’t show their appreciation (or lack thereof) for the questions posed and answers given (i.e. cheers or jeers that use to be part of in-person meetings)
- Lastly, members are unable to meet and discuss matters with other members either side of the formal meeting i.e. virtual-only meetings restrict the opportunity for members to congregate, dicsuss and organise.
Combined, these factors likely result in worsening member participation and engagement, as members lose faith in the value of the AGM, as well as trust in the society and the board.
8. Legality of virtual-only AGMs is questionable
Virtual-only AGMs are not only flawed in terms of fairness and transparency. They may also be illegal. The Financial Reporting Council (FRC) challenged whether virtual only AGM satisfy the requirement of “place” (as stipulated in legislation) in its July 2022 publication Good Practice Guidance for Company Meetings:
I emailed the FRC to see if their guidance has changed since. It has not – see their reply below:
Our position on the interpretation of the law regarding AGMs has not changed since the publication of the July 2022 “Good Practice Guidance for Company Meetings.” Under the current legal framework, there remains some uncertainty as to whether s.311(1)(b) along with s.360A of the Companies Act 2006 supports virtual-only AGMs. As highlighted in the image within your email, this is due to the legal interpretation of the word ‘place.’
Given the uncertainty, companies authorised to run some form of virtual element under their Articles of Association continue to highlight a physical ‘place’ of meeting within their notice of meeting, indicating where the AGM will take place but, in many cases, may discourage shareholders from attending physically.
Our view is that companies should seek to maximise the participation and engagement of all types of shareholders on the register and, where appropriate, take advantage of technology to increase participation and engagement. As a result, in 2022, we, along with the AGM Stakeholder Group, created this guidance to assist companies opting for hybrid, virtual, or physical meetings.
Email response from the FRC, June 2025
Note that Nationwide is subject to the Building Societies Act (1986): the same lack of a definition of ‘place’ exists. The current UK government is also reviewing the practice, highlighting that virtual(-only) AGMs are not on firm ground from a legal perspective:
My department will also launch an ambitious consultation next year [2025] aimed at simplifying and modernising the UK’s non-financial reporting framework. Efforts to modernise will also include examining the potential for updating shareholder communication in line with technology and clarifying the law in relation to virtual AGMs.
Jonathan Reynolds, Secretary of State for Business and Trade (14 October 2024)
The Telegraph: “Nationwide’s mutual ethos is now under threat”
My thanks to Michael Bow at the Telegraph for a long article examining the impact Dame Debbie Crosbie is having at Nationwide building society.
Read the full article here (25 June 2025): How Nationwide’s £7m boss became Britain’s most controversial banker
Michael quoted me throughout the article, sharing some of my concerns with regard to the current direction of the building society – in particular the degree to which it continues to exhibit bank-like behaviours: high and increasing executive pay; disregard for members; and the inequitable “fairer share” payments that go to a subset of members that have current accounts.
Nationwide AGM 2025: the illusion of governance and the futility of membership
With 17 million Nationwide building society members eligible to vote, more than some sovereign countries, the “modern” mutual’s 2025 AGM should be a leading example of democracy and corporate governance in action.
Instead the largest building society in the world exhibits contempt for its members by acting in an exclusive and autocratic manner. The outcome is largely a foregone conclusion: very few members attend the AGM, and voting turnout runs at 4% (of which 95% vote in favour). Monitors would classify such a general election result as more befitting an authoritarian, rather than democratic, regime.
Leadership can only be challenged once a year, at an inconvenient time, in a highly stage-managed, virtual environment.
Nationwide holds its Annual General Meeting mid-morning, mid-week, and at the start of the summer holidays. This prevents nearly all members from participating. Most mutuals choose venues, dates and times that raise engagement, not restrict it.
Nationwide is the only building society to operate a virtual-only AGM. The legality of such practice has been called into question by the Financial Reporting Council, while the government has called for a review. Meanwhile every other of the 41 building societies in the UK allow members to attend their AGM in-person. Some also include the option of joining online.
Nationwide instead chooses to: contribute to digital exclusion by denying attendance by those without the necessary skill or technology; employs a Q&A process that means questions can be filtered, screened from view or simply ignored completely; and effectively prohibits members from meeting and interacting with fellow members.
Alternative views are not tolerated.
Nationwide resisted a call for a vote on Virgin Money, the largest acquisition in its history, contrary to the spirit of the law. Nationwide opaquely deems member nominations for their own candidate as invalid or ineligible. Nationwide objects to applications to the FCA to access the member register (a statutory right). Nationwide refuses to allow members to submit nominations or resolutions through digital means (a particular double standard given its investments in technology, support for a virtual-only AGM and electronic voting).
There are no alternative candidates or resolutions on the ballot as a result. So instead of being able to vote FOR an alternative to the board’s recommendations, if you disagree, all you can do is vote AGAINST.
Voting outcomes are skewed by the “quick vote”.
Nationwide employs a prominent, and much criticised, “quick vote” option that makes passing initiatives that are not supported by the board almost impossible. It appears at the top of the paper ballots, and is the first option for electronic ballots (where selecting it makes all other options disappear). Over 80% of members choose to quick-vote, handing considerable power to the chair in support of the board’s recommendations. As a result, approval rates run at 95% or higher.
Even if members were to overcome the inherent bias of the quick vote, some agenda items (e.g. executive remuneration) are non-binding.
Less than 0.002% members attend the AGM. Turnout is just 4% (of which 95%+ vote in favour of the board’s recommendations).
Nationwide argues that this low level of participation is a good sign: members are perceived as mostly content with the status quo.
The alternative argument is that members recognise their participation is futile: the deck is so stacked against them having their say that turning up to the AGM or voting is a pointless, illusory exercise in governance.
Nationwide’s management and board pursue their agenda unchecked.
Members’ voices aren’t well represented and can be easily ignored or dismissed. Big decisions can be pushed through unchallenged. Adverse outcomes can materialise without consequence or accountability for the individuals responsible.
As the emphasis of the building society continues to shift towards ‘banking’, it gets harder to see the distinction between the verb and the noun — despite expensive, poorly-executed representations to the contrary.
The board meanwhile supports management in its quest: an expensive and unpopular acquisition, increasing executive pay and growing margins rather than passing on the benefit to all members (“fairer share” payments to a minority of members could be argued to more closely resemble distracting bribes than an equitable distribution of mutual profits).
Take action: Nominate a candidate to represent your views.
James Sherwin-Smith is seeking nominations from eligible members to represent member views at a board level. Nominate James today so that there is at least one member nominated candidate on the ballot next year.
“Have your say”: Vote AGAINST all measures.
In the meantime, with no alternatives available to vote for on the ballot, make your voice heard by registering your protest. Reject the quick vote option and instead vote AGAINST all ballot entries.
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?
The Big Nationwide “Thank You”: £50 for what and why?
Nationwide 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?
Nationwide has spent members’ funds on the following to date given 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 (for an expected 6 years), to Richard Branson’s Virgin Group for the right to use the “Virgin Money” brand – which Nationwide expects to close down in due course
- Over £80 million estimated in fees and expenses (advisors, bankers, external public relations, lawyers etc.)
- £650 million capital injection into Clydesdale Bank, a Virgin Money subsidiary
- £617 million to members as a “thank you” for using their money to buy Virgin Money without their say
- An estimated £10 million on administration and marketing spend (online and in print) to promote the “thank you” payment – perhaps in an effort to curry favour with news editors.
- £5 million in additional compensation for the society’s directors (see Resolutions 2 and 3 passed at the last AGM) for governing a more complex business of their own creation
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 now over £5,600 million (see this Google sheet for calculations and sources). Some of that amount (e.g. integration costs) might be funded out of future profits of the combined Nationwide Group (noting the most recent interim report shows profits are down on last year). But the vast majority is clearly being funded out of reserves, i.e. members’ equity in the business accumulated from profits over 100+ years, as the deal was not financed by debt.
The Virgin Money deal was effectively therefore a massive transfer of wealth: from members’ equity in Nationwide, to Richard Branson (via the Virgin Group), Virgin Money management and shareholders (most of whom were Australian, following the demerger of the Clydesdale and Yorkshire Banking Group 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 on the acquisition by the Nationwide board.
Thank you payment just raises more questions
Perhaps the Big Thank you payment is an example of Nationwide listening to member feedback, noting the negative comments received from members excluded from the “fairer” share payments in the past. This one-off payment is more equitable in its distribution to members: the “thank you” payments will be paid to more than 70% of all members (12m out of nearly 17m), unlike the £730 million spent on “fairer share” payments across 2023 and 2024 which were paid to less than 25% of members (fewer than 4m 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.
It is also 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 in the past.
A number of questions remain:
- Why is Nationwide doing this, and why now, given the economic climate and lower Group reserves given the massive sums spent on the Virgin Money acquisition?
- Were members consulted? It’s clear people are being asked about it after the event via the Member Voice platform, but there appears to be no discussion of the alternative uses of members’ funds.
- Do management have more certainty around future profits of the Nationwide Group?
- Will the Virgin Money integration be shorter or cheaper than anticipated?
- Or is this 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 previously retained profits 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 the customers saving or borrowing small amounts, as eligible members are all receiving the same payment, despite different balances in their accounts.
Further, is giving away a uniform £50 or £100 per member the right thing to do during a period of significant economic uncertainty? Would it have been wiser to keep this money in reserve? Note that the payment is treating as interest, so is taxable, and therefore distributing profits this way these means a portion of these payments are going to the government via income tax.
Make home ownership more achievable and affordable
Or should a building society like Nationwide be focused on offering better mortgage rates instead (which wouldn’t incur tax), during an ongoing cost of living crisis? That might have been a better use of the estimated £6.3 billion of members’ money spent on Virgin Money and these unsolicited “fairer share” and “thank you” payments as per the above.
To put £6.3 billion into context: it is the equivalent of 1% off the mortgage interest rate for every member, for three years in a row. (The latest figures put the residential mortgage book at £211 billion, so 1% in interest is £2.1 billion.) For the average mortgage (borrowing £200,000 over 25 years at an effective rate of 3.84%), a 1% rate reduction reduces the monthly payment by £109. So over three years, that would save the average mortgage customer almost £4,000.
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 can conclude is that Nationwide believes it knows better than the membership (that it is supposed to serve, and who ultimately own the building society). This “Thank You” payment serves as yet another example of this, after Nationwide avoided 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%).
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.
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.
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? (2 August 2024)
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. (See separate article on this topic: “Why mutuals matter“.).
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 (1986). 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 (See how voting at the Nationwide building society has changed over time: “Why I believe access to the register is needed.”)
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.