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High cost in high street if the Nationwide demutualised

If Nationwide Building Society were to demutualise, UK borrowers and savers would pay over £30bn more in higher mortgage rates and lost interest over the next 10 years, warns the Consumers&#39 Association.

The claim comes after the CA analysed research of the last five years which examined the potential impact of the remaining building societies converting to banks.

The CA claims a Nationwide conversion would seriously undermine competition on the high street by removing the pressure on banks to focus on consumers rather than shareholders. It calculates this would eventually cost customers around £33bn.

Consumers need a thriving building society sector to counter the natural inclination of plcs to make the maximum profit from customers to pay higher dividends for shareholders, says the CA. It believes this is essential now banks hold almost 80 per cent of mortgages and savings accounts in the UK.

Despite being the main target for carpetbaggers, Nat-ionwide is not due to hold a demutualisation vote this year after throwing out saver And-rew Muir&#39s conversion resolution on the grounds that it contravened the society&#39s windfall clause, which donates any windfall payouts to new members to charity.

CA senior policy adviser Mick McAteer says: “In light of our analysis, we would urge members to use any future Nationwide vote wisely. The initial windfalls which have enticed members to vote for demutualisation in the past can be tempting but our analysis shows that members will lose out in the long term.”

A Nationwide spokesman says: “This research supports what we have been saying for some time – that there is significant mutual advantage. We are pleased to see the CA showing how valuable building societies are to both their members and as a competitive force on the high street.”


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