26 April 2024
Dear FCA Mutual Societies team
(cc Nikhil Rathi, Mikael Armstrong, Treasury Select Committee, Treasury action team, Bim Afolami MP, Julie Elliott MP
bcc journalists that have covered this story)
We have been sent your below response [1] by supporters of our campaign who have raised concerns about the Nationwide Building Society.
We find this response unacceptable and we’d like to appeal this outcome. How can we do this please?
We understand from your response that you refuse to comment on a specific society. However this society is clearly circumventing the law and disenfranchising its 16 million members from a key decision about its future. Why is this being permitted?
We have read the legislation and we have considered the tests contained within – see attached. This acquisition, based on the tests as written under law, and based on the latest financial statements from the companies involved, clearly suggests that a member vote is required.
The attached calculation from the campaign for a member vote that has nearly 4,000 signatories – it couldn’t be made any plainer. This calculation has also been shared online [2] and via spreadsheet [3] (despite the maths being very simple) using the links below.
What is your role as a mutual society regulator and a regulator of conduct by financial institutions to protect consumers from harm if you are going to allow such a flagrant circumvention of the law of the land?
For those on copy – please see notes below.
Best regards,
J Smith
On behalf of the campaign to Give Nationwide Members a Say on the Purchase of Virgin Money
https://nationwide-virgin-money-member-vote.org.uk
[1] FCA response received from campaign supporters
Thank you for your submission of a form to report a concern about Nationwide Building Society, in our capacity as the registering authority for mutual societies.
You will appreciate that we do not comment in relation to a particular society. We have however set out information below on the position more generally.
General position
Building societies are registered under the Building Societies Act 1986 (the Act).
We are the registering authority under the Act. It is within the powers of a building society to acquire another business. Where they intend to do so, there may be a requirement to hold a vote by the building society of its members on that acquisition under sections 92A of the Act. This requirement is however only triggered where the conditions set out in sub-sections 92A (3) and (4) of the Act are met. A link to the relevant section of the Act is provided here: https://www.legislation.gov.uk/ukpga/1986/53/section/92A.
Where a building society is not required under the Act to hold a member vote, the question as to whether a vote can take place anyway depends on i) the building society’s own rules (as agreed with its members); and ii) any other applicable legal requirements.
A building society’s own rules
Generally, where members have, through the rules of the society, given the board of the society the power to make a decision, that decision remains with the board. If members want to take that decision back, they would first need to amend the rules of the society to do so.
Other law
Transactions may be subject to other legal requirements outside of the Act or the society’s rules. These include, where relevant, the Takeover Code: https://thetakeoverpanel.org.uk/
Nationwide Building Society
You have asked specifically about Nationwide Building Society. As set out at the start of this email, we do not comment in relation to individual societies.
We note Nationwide Building Society have provided comment on this position of a member vote on their website: https://www.nationwide.co.uk/news-and-stories/nationwide-and-virgin-money/#answers
Your report
Having considered the matter, we are of the view that there is no action for us to take. Given this, and the information set out above, we will therefore not be taking forward any action in relation to your reported concern. We thank you for taking the time to raise this matter with us.
Many thanks
Mutuals Team
Financial Conduct Authority
[2] Campaign website article
https://nationwide-virgin-money-member-vote.org.uk/2024/04/12/why-a-member-vote-is-required-under-section-92a-of-the-building-society-act-1986
[3] Campaign Google sheet showing calculations and sources
https://docs.google.com/spreadsheets/d/1JIYzHVF1nfN4WOuEiFz7jX5OkRyknQAdMkV1VXI4JHg/edit?usp=sharing