Building society ‘democracy’

I have a series of opened envelopes on my desk in front of me, all from building societies telling me that it’s time to cast my votes to approve their accounts, approve the directors’ remuneration and elect my directors.

It’s pretty frustrating. I am pleased that we still have mutually owned building societies after the demutualisation madness twenty years ago.  I support the idea of the societies being member-owned. I want to use my votes.

And yet democracy is not on the agenda. Not one of the building societies offers me a contested election for the board.  The days when there were candidates for building society boards – particularly at the Nationwide – who were unendorsed by the existing board (and who were generally put up by the grassroots Building Societies Members Association) have passed. The BSMA now seems a very small little affair, unfortunately.

Of course, building societies are complex financial institutions and we need competent directors.  But that doesn’t necessarily mean that the only suitable board members are those initiated into the magic circle of non-exec directorships and who hold accountancy qualifications or have spent their lives in banking or finance. It’s frustrating how few directors mention in their election addresses that they support mutuality, for example.

On the other hand, my relationship with the societies of which I am a member is also pretty much solely a transactional one.  Although I do try to save with some of the smaller societies, I am fickle in my favours, tending to look above all at the interest rates being paid  and nothing much else.

So I will vote, but I will vote without enthusiasm.  And I will vote will no clear sense of how mutual organisations such as building societies can at this late stage in their development ever really be once again genuinely member-owned and member-responsive.

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Little democracy in member-owned building societies

This is the time of year when I am invited by the building societies in which I have savings to participate in their democratic life.  It’s, frankly, not much of an invitation. Building societies may be technically member-owned, but the ballot paper which comes round invariably allows me to vote (or decline to vote) for exactly the number of directors for which there are vacancies. It has been many years since I have been aware of contested elections for the boards of any of the major building societies and even more years before an ‘unofficial’ candidate not supported by the existing Board was elected (this was at the Nationwide some twenty years ago).

The usual device used by building societies is to bring in a new director by co-option, who then serves until the next annual election – at which point of course their name is added to the ballot paper in an uncontested election. It is, I’m sorry to say, a poor recipe not only for democracy but also for building society diversity and renewal.

So my heart sinks when the annual report and ballot arrives from the Ecology Building Society, and I find that the Ecology has followed industry norm: no contested election for the board and a new director brought in mid-year as a co-optee who we now have to endorse. The Ecology this week announced strong performance results, and I am pleased at their success. They also hold attractive green-themed AGMs which usually have good attendances. But I would be even more pleased if the board  proactively worked to attract more candidates than places in future board elections.

Incidentally, the small and dedicated (if sadly all too powerless) Building Societies Members Association is still going after more than thirty years of campaigning for some real member engagement in societies. They have recently been trying to help get independent candidates on to ballot papers, not an easy task. They deserve to be commended for their perseverance.