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The Bellwether for mutuality?

Despite Standard Life members rejecting the advances of carpetbagger Fred

Woollard last week, group manag-ing director Scott Bell dec- lared there

would be no Champagne after the victory.

The muted celebrations followed criticism that the life office had not

fully explained to members the pros and cons of mutuality and plc status

despite spending more than £10m on the campaign to persuade them to

vote no.

Accusations of the board&#39s incompetence and lack of even-handedness rang

around the special general meeting at the Edinburgh Conference Centre,

climaxing with a demand for the board to fall on their swords over the way

the vote was handled.

What went wrong? In July 1998, Nationwide Building Society fought off the

demutualisation aspirations of former carpetbagger-in-chief Michael

Hardern. What did Nation-wide do so differently which meant it escaped the

deluge of criticism that the Standard board faced in victory?

Nationwide senior press officer Peter Brown says: “What we did very

successfully is highlight the benefits of mutuality. Nobody would ever

accuse us of being shy of taking every opportunity to do this.”

Campaigners declared Standard&#39s victory a decisive moment for mutuality

and it certainly appears as if the principle has received a powerful

endorsement, even if a loud proportion of members remain resentful.

The result must surely be putting the wind up Bradford & Bingley Building

Society, which is desperately trying to convince its members of the

benefits of becoming a plc ahead of its special general meeting on July 17.

On learning that Standard had won its fight against demutualisation,

Nationwide chief executive Brian Davis said: “With only three weeks to go

until Bradford and Bingley&#39s vote, it will be interesting to see how its

members think about the long-term value they might be signing away. Our own

experience clearly demonstrates that remaining a mutual means higher

savings rates and lower mortgage rates.”

Chelsea Building Society public relations and corporate affairs controller

Darren Stevens says: “The message the Standard vote is sending out to

people is that, at the very least, the vote was one big opinion poll. It

will have an effect in that people eligible for the B&B vote will start to

believe their vote makes a difference. They may think again, particularly

on the borrowing side.”

But B&B rejects the likelihood that Standard&#39s victory will have a

knock-on effect on its own future. B&B press officer Alis Marjoribanks

says: “It is a very different vote for a building society to a life office.

When we had a vote last year, it was very clearly a mandate for

demutualisation. The vote is not in yet and we are not complacent. We have

educated our members very clearly.”

Given that it took over £10m and an unquantifiable amount of energy,

emotion and sleepless nights for Standard to fend off one Monaco-based fund

manager, how will the life company convince IFAs of its strength for the

future? It will have to throw off the image of vulnerability that the last

few weeks&#39 events have revealed.

While IFAs received special thanks for their support – and many are

indeed glad that the life office will remain a mutual – Standard can never

again rest on its laurels and take for granted that it will be the eternal

sweetheart of IFAs.

Riach Independent Financial Advisers proprietor Bob Riach says: “You have

to ask, realistically, how long is it before the board is approached again?

If a client was thinking about Standard Life now, I would be firing the

warning shots and certainly raising a question mark.”

Perhaps the most vociferous commentator on Standard has been life office

analyst Ned Cazalet, whose opinion on the strategy and future for Standard

Life is less than rosy.

Cazalet says: “It is no good looking at Standard&#39s past business

performance, everyone is now focused on its future performance. But where

is its strategy going?

“There are two key business areas which need to be considered. Standard

hasn&#39t got a stakeholder proposition yet .but has a relatively

high-charging pension. It is also still selling endowments although the

market is shrinking. There is no strategy.”

Cazalet also believes that Standard is vulnerable to a buyout now that its

weaknesses have been exposed.

He says: “Some players will be listening to the mood music. A lot of

Standard Life members have reason to be hacked off but there won&#39t be

another Woollard for a while. There might, however, be some corporate

activity with an opening shot of £14bn.”

But the last word must go to Standard, which genuinely appears to be

taking on board many of the shortcomings that have been exposed.

National sales manager Alan Dring told Money Marketing the day after the

vote: “I was in a meeting this morning and the message that came out very

strong is we won&#39t let this drift away. The platform for going forward is


It appears that Standard rightly adheres to the adage: “What doesn&#39t kill

you makes you stronger.”


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