The Halifax has consistently argued that mutuals may have a role to play in the UK but only small mutuals such as credit unions. Bigger mutuals will face increasing pressure to convert.
We have also argued that the assumption that mutuals such as building societies are, by their very nature, better than their plc counterparts is simply not true.
There has been a great deal of “spinning” by building societies over the past few years to the effect that they offer superior products in comparison with plcs. All we are saying is that people should look at the substance rather than the spin.
On closer examination, it is clear that building societies very often do not offer the most competitive products. Indeed, there is a great deal of evidence to show that a large number of them are not as squeaky clean as they may want people to believe.
The facts speak for themselves. On the mortgage side:
Twenty-nine of the UK's 67 building societies charge borrowers penalty interest on their standard variable-rate mortgages if the borrower repays the loan early.
Nearly 60 building societies have higher variable base mortgage rates than Halifax. In addition, very few building societies offer daily interest. Nationwide, the biggest building society, has only been offering this facility for three weeks. Indeed, it was the last major lender to do so.
Twenty seven building societies continue to charge extended redemption penalties.
Fourteen building societies continue to insist on customers taking the society's insurance when buying certain products, a practice denounced in 1999 by Trade & Industry Secretary Stephen Byers.
Twelve societies charge extra interest if customers do not take out the society's own insurance products.
Twenty building societies charge interest to the end of the month when a borrower repays their loan, adding hundreds of pounds to the final bill.
Since the Nationwide announced the restructuring of its new business range, it appears that it has not featured in any national mortgage best-buy tables – a key indication of any product's competitiveness.
In addition, around 25 per cent of all building societies do not offer any fixed or capped-rate products at all. Hardly a case of building societies offering competitive products.
Another assumption that needs to be challenged is the myth that building societies offer better rates to savers. Again, let us look at the facts.
Where should an average saver wanting to put £1,000 in an instant-access account invest their money? Looking at last week's independently produced best-buy tables in the national newspapers provides the evidence.
Of 46 recommendations in the tables, only 12 were for building societies while the other 34 were for banks or new providers.
The arguments for “crystallising” the value of ownership are very strong for building society members. The vast majority of investors in a building society will have balances of less than £1,000.
These savers benefit by no more than £10 a year even if a 0.5 per cent interest rate differential is sustained. Proof, if proof were needed, that the average saver at a building society would be better off financially if their society converted to a plc.
Competition is the name of the game in UK financial services these days. Unfortunately for building societies, they have probably been too focused on spin rather than substance in recent years.
They need to look at the products they offer, particularly mortgages and savings. It would appear they have a great deal of work to do to ensure their customers get good value products across the board.