‘Renaissance’ of building societies: David Webster, BSA
New BSA chairman speaks to FTAdviser about how the mutual proposition is “significantly different” to banks.
Banks have not had a good week/month/year. Several under investigation by the regulator for manipulating London interbank offered rate and for mis-selling interest rate hedging products to businesses.
However, the Building Societies Association insists building societies should not be lumped together with banks, arguing they have a different proposition and a focus on customer service.
In May, David Webster was appointed chairman of the BSA. He is also chief executive of the Hanley Economic Building Society and also has a small IFA business called Hanley Financial Services.
In the last two weeks, we have seen numerous witnesses give evidence to the Treasury Select Committee regarding Barclays’ role in manipulating Libor. However, Mr Webster rules out mutuals also playing a role in this.
Although the recent banking scandals have created an opportunity for mutuals, the reputation of the industry as a whole is damaged
He said: “Libor is very rarely used as a benchmark rate for mutuals. We use either the bank base rate for trackers or our own standard variable rate. It is very rare for Libor to impact us directly.
“Of course, there is a domino effect and at some point it might have an impact on us, but in the short-term it’s something we can stand back from a little bit.”
However, he warns that in the long-term we should expect “more intensive regulation” and agrees with the Vickers report that a step in the right direction would be a separation of retail banking from the investment arm.
“In some ways it plays to the old building society model because the retail model is similar to what we have, so I envisage that will happen and when they talk about a change of culture within the banking sector that is where the change in culture needs to be more apparent I would say.
“It seems as if the culture of the traders’ desks has seeped into the bank as a whole and that is what needs to be distilled through but let’s face it, a change in culture doesn’t happen overnight.”
Spot the difference
Mr Webster admits that although the mutual model is different to banks, there is a danger that consumers lump the two together. Many customers for example still think of Halifax, Cheltenham & Gloucester, Bradford & Bingley as building societies.
“It’s always been difficult for us to distinguish between converted banks and building societies. It’s similarly difficult for us to show that we are distinctive from the banking fraternity and that’s one of the things we need to work harder at, as I believe we have a different business model, a different ethos and I think we are a far less risky proposition to the consumer.”
He is a big believer that the mutual proposition is “significantly different”.