The Building Societies Association launched an astonishing attack on the Woolwich last week, accusing it of failing its customers and labelling it a declining brand.The blast was made all the more conspicuous as the BSA is not known for vehement outbursts, rather it is seen by many as a more diplomatic trade body in the mould of the companies it represents whose aim is to serve their customers rather than having to please shareholders. Woolwich hit back and defended its brand and insisted it is producing a range of products to meet its customers’ needs. It used a football analogy to demean the BSA by likening the trade body to struggling Norwich City, which last week sacked its manager after a run of poor results, while comparing itself to Arsenal, who came fourth in the Premiership last year. The war of words has reopened the debate about whether brokers and customers get a better service from mutuals or banks. BSA head of external communications Rachel Blackmore says: “The BSA believes there is incontrovertible evidence that consumers are worse off now with plcs as there are more profit-maximising companies in the market than there were before the demutualisations. “What people have gained in sheer volume of products, they have lost in organisa-tions focused only on the consumer and branch closures. One of the disadvantages of demutualisation is that margins need to increase. “BSA analysis of plc accounts shows that it costs on average 35 per cent more to run them because of shareholder dividends. This means that banks have to squeeze every penny of profit out of what they sell their customers.” BSA director-general Adrian Coles says: “Closing all the Woolwich branches highlighted the decline of this once great brand. The commitment to maintaining its high standards of customer service has changed as a result of shareholder pressure. Size does not mean everything, as the excellent results of many building societies much smaller than Woolwich have demonstrated.” Woolwich demutualised in 1997, the same year as Alliance & Leicester, Halifax and Northern Rock. On recent performance, few brokers are likely to complain about Halifax’s service or that of any of its fellow HBOS brands. Northern Rock has been hailed by some as a credible challenger to HBOS’s dominance while Alliance & Leicester is not regarded as having any major service problems. Most brokers are not concerned about whether a firm is a mutual or not, they just want good service and insist the quality and decision-making of the individual management is more important than whether a lender is a PLC or not. John Charcol senior technical director Ray Boulger says: “You will have good and bad firms in both areas and that depends on the management. The argument that building societies do not to have to pay out to shareholders is true but they have to make a profit to build up reserves. “The advantage that limited companies have is that they have greater access to capital markets which can help them expand. There is no black and white in this debate and it is not a question of size. For example, a broker can discuss an exclusive deal with a small society today and sell the product tomorrow but it can take a lot longer with some of the bigger societies as there are more hoops to jump through.” London & Country head of communications David Hollingworth says: “Service can be bad with any lender at any one time and it does not matter whether they are a building society or a bank. It does not really matter to a broker if a lender is a mutual or not. It is a little harsh for the BSA to be picking on Woolwich. It has had problems but it is trying to sort them out.” The catalyst for the BSA attack came from the decision by Woolwich parent Barclays to rebrand the Woolwich branches as Barclays, making Woolwich a mortgage-only brand. But despite some service concerns, the general consensus is that the Woolwich is getting its act together and improving in terms of service and products. Woolwich’s relaunched lifetime tracker at 0.19 per cent above base rate has attracted praise from some brokers, as has its offset offering, while the influential Boulger insists that Woolwich’s service is improving. He says: “Since Woolwich got rid of Global Home Loans as its outsourced servicer, its service has improved.” The BSA says its attack could have been directed at any demutualised society as it claims that many more have closed branches and services has suffered. One society that has remained a mutual is Nationwide. It has been in the headlines recently after it announced the takeover of the Portman which will go through next September. Blackmore acknowledges its success but adds: “There are some smaller societies that are generating lower costs and brokers find it easier to interact with local societies. I would also agree with Ray’s point that smaller societies are good at getting deals out fast.” Nationwide can be held up as a society that has had plenty of success but there are still niggles from some brokers about its service levels and that it is behind its competitors on technology – problems it admits but it has pledged to address.