Mail on Sunday article on the health of building societies.

I was surprised to open the Mail on Sunday money section this weekend and find my photograph in it in a section on Building Society Chief’s pay. As I know Jeff Prestridge the Editor, I was a little disappointed that he had not mentioned it in advance.

The mentions of Saffron through the article on the health of the sector were on the whole very positive, but Jeff made a play about my pay increasing in 2008, however this is as a function of 2007 performance in which Saffron had its best year ever. In fact no Director has taken a pay increase in 2009 to reflect the economic climate in which we find ourselves; a fact which the article did not make clear. Directors pay is a matter for the non-executive remuneration committee and our membership vote.

Jeff is quite right in many ways, the UK is facing the worst recession in recent History and Building Societies do face many challenges as a result. There has been the significant levies to the financial services compensation scheme for the failures of the Icelandic Banks and Bradford and Bingley, the low interest rate climate driving lower returns on capital, margin squeeze and of course the potential for mortgage arrears to worsen with unemployment increasing. However societies are fairing much better than banks in these troubled times, which is a testament to their less complex and less risk orientated business models.

It was nice to see Saffron Member Chris Jossaume quoted in the article. He stated that “Saffron seems good at communicating” and felt that our AGM was a useful source of good financial information, in simple laymen’s terms. It was also lovely to read his quote that read “The Society is a cornerstone of the local community”. It was just a shame that it was under the headline “Saffron members are lost for words”, which was true during the section of my AGM presentation which showed the 40 financial firms that had failed or had to be bailed out since the “credit crunch” began, as the article goes on to say.

Unfortunately blunt comparisons sometimes leave important facts out. Saffron’s operating profit was actually better in 2008 than the previous year, but of course with £1.1M put aside to fund the next 3 years levy to the FCSC and the Boards desire to sure up a potentially worsening economy through increased provisions for bad debts, the final pre-tax profit number was reduced. But Saffron is in great shape and the sector as a whole is much more robust that the Mail on Sunday article would have readers believe. But I guess boring, traditional, un-complicated and safe are not words that sell papers. Of course one could envisage some consolidation in all business sectors and it is not beyond the pale to assume that a few societies may decide they can provide a better deal to members through merger over the coming months, but this is not a new phenomenon and should by no means be regarded as a sector in danger. Mutuality has got legs as have building societies. Saffron celebrates its 160th birthday this year and on my watch I fully intend to ensure that it will be doing so in another 160.