As the dark clouds gather over the banks and their involvement in the Libor scandal, mutuals are continuing quietly to do what they do best – serve their members.
It is well known that there is no love for mutuals in all their forms within Whitehall or Canary Wharf, although they negotiated the banking crisis with tremendous dexterity and continue to function superbly in the current recessionary climate, serving members and offering mortgages to young people.
In all this there is no scandal, no short-termism, no exorbitant bonuses to divert them away from their core business.
Of course, some mutuals are better than others and those, like the Co-op Bank, which try to imitate commercial banks in their business models, can often fall foul of some of their customers.
Also many of those building societies that were so keen to demutualise – Northern Rock, Bradford & Bingley, and others – soon realised the folly of their ways. They got involved in a game they could not win.
Remarkably, despite their performance, mutuals have been given a hard time by the regulator, applying the same distorted yardstick to credit unions, for example, that should be applied to the high street banks. The end result is that small communities are now intimidated from forming credit unions and other self-help organisations for fear of falling foul of the regulator.
The one lesson that recent history has taught us is that there is room for different models.
Young people now in the final stages of packing to leave home for university will no doubt experience the most transformative period of their lives.
Away from the protective love of their parents, they will experience for the first time what it means to be an adult.
However, along with those freedoms – getting drunk when you like, attending lectures if you remember, and being mischievous in other ways – there is a ticking debt time bomb that some people now predict they will not repay until they reach their early 50s.
This is a burden that no generation should be obliged to bear, far less by their parents’ and grandparents’ generations, the baby boomers, who had a life with relatively little responsibility.
Their student grants were paid for by local council ratepayers, they had access to mortgages during the boom years and in the main they had no problems finding jobs during the full employment years.
All these advantages make for a pending inter-generational conflict, which makes the suggestion by a group of leading Tory backbenchers that those over the state retirement age still in employment should continue to pay national insurance contribution reasonable.
Why shouldn’t they? Not only are they staying on in jobs, making it difficult for younger people, but the luxury of not paying national insurance is an age-related perk too far.
More from Hal Austin
- Saving for retirement requires savings, which many lack
- The mystery of income protection
- Advice is for other people
- The weird world of ‘ethical’ investing