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Super-mutual has rivals in a sweat

The merger of Nationwide and Portman has left rivals sweating about their ability to compete with the super-mutual in terms of costs and consumer care, says MP Andy Love.

Speaking at a Labour fringe event at the party conference last week, the MP for Edmonton says the merger will introduce a massive competitive edge into the market and leave non-mutual rivals worried about its impact on their long-term business.

Love, a member of the Treasury select committee, said the main reason that firms such as HBOS have had to keep their rates low was because of the “spark of competition” from mutuals which he believes will be hugely enhanced by the merger.

He said that in order to help the mutual sector thrive, the Government should place responsibility for diversity in the marketplace with the FSA – a move that was rejected when the Financial Services and Markets Act was created.

Love said he was in no doubt that consumers lose out from demutualisation by firms “deluding” them about the proposed benefits and highlighted calls for the independent scru-tiny of votes and a more even argument.

Buildings Societies Association spokeswoman Rachel Blackmore said consumers had been “swindled” by past demutualisations creating “inter-generational plunder” and backed the Nationwide merger to force more focus on consumer issues.

Love said: “This merger will produce an enormous competitive edge within the marketplace and I suspect some other financial organisations are sitting sweating at the moment worried about how it will impact on their business over the long term.”

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