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Chelsea flowers

Chelsea Building Society marketing manager Darren Stevens says eyebrows were raised at the society last week over carpetbaggers&#39 renewed attempts to demutualise Nationwide.

It was not so much the move itself but more the appearance of a face familiar to Chelsea which has re-emerged to bolster the Nationwide conversion campaign.

Andrew Naughton-Doe, a chartered secretary from Feltham, last week threw his weight behind the latest efforts to force the UK&#39s biggest building society to convert.

Naughton-Doe had led the campaign to demutualise Chelsea until his conversion resolution was thrown out in January on the basis that it would interfere with the board&#39s ability to run the society.

Stevens says: “We were very surprised to see him participating in the Nationwide campaign, as last December he had stated his effort against us was his first and last foray into carpetbagging.”

As a veteran bagger battler, Stevens has some sympathy with Nationwide. He thinks Naughton-Doe may again be backing the wrong horse by trying to overturn Nationwide&#39s windfall clause, which requires new members to sign away any payout rights to charity.

“Attacking the windfall clause is a bit naive. I cannot see it succeeding. It smacks of desperation on behalf of the carpetbaggers,” says Stevens.

As the UK&#39s eighth-biggest building society, Chelsea&#39s own tussle against demutualisation received less media scrutiny than Nationwide&#39s, something for which Stevens is thankful.

The low-profile coverage meant the society&#39s call centre only fielded six calls in the week following the rejection of the resolution, which Stevens considers to be a good measure of the support of members.

He expects Chelsea to come under attack again at some point but remains unconcerned. “We do not fear another campaign. We are quite experienced now and are getting stronger all the time.”

Last year, Chelsea gave £30m back to members in higher savings rates and lower mortgage rates. Its lending target for this year is £1.1bn, up from last year&#39s total of £1.02bn, which it hopes to achieve through a variety of new and existing products.

In particular, Chelsea wants to increase sales of its impaired-credit, buy to let and self-certification mortgages, the latter recently rolled out to intermediaries.

Stevens says: “We are making sure we have the right products to meet the goals we have set ourselves and we are on target to do that. But we are monitoring performance to see how it is affected by the Halifax and Nationwide announcements.”

The so-called mortgage war is something that Chelsea is refusing to be drawn into at present although Stevens says the society plans to act once it becomes clear how the market will absorb the change in strategy. Chelsea may be keeping its options open for now but Stevens views the spate of rate slashing as a positive move for the lending community as a whole.

He says: “We welcome what has happened because it has addressed the misperception that existing borrowers are paying for cheap deals for new customers. When the majority of people took out a mortgage for the first time, they got a special deal.”

While many of the big players, including Abbey National, Cheltenham & Gloucester and Halifax, have made moves to put their existing borrowers on an even footing with new customers, Stevens singles out Nationwide as making the boldest move.

Nationwide has stopped offering heavily discounted mortgages which lenders traditionally offer to entice new business – a move Stevens thinks could backfire.

He says: “Nationwide&#39s decision could impair its position in the intermediary market because IFAs often use mortgage sourcing systems that favour loss-leading headline rates.”

Chelsea is keen to further its relationships with IFAs although the society is wary of forthcoming FSA regulations which hand the responsibility for the pre-sale disclosure of intermediaries to lenders.

It plans to deal principally with networks when the new rules come into force, currently set for nine months after N2, as it will be easier to deal with a single compliance office than thousands of brokers.

Although Stevens sees most lenders going down the same path, he is not a subscriber to the belief that the regulations will force smaller IFAs out of the mortgage market.

He says: “I cannot see many IFAs leaving the market. Many already belong to networks or will eventually join one. Lenders rely too heavily on IFAs and brokers for distribution to stop doing business with them.”


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