Halifax: Converted from building society to bank

MPs Call For Action Against "Carpetbaggers"

Speculators hope to cash in on windfall payments, such as those recently paid out by the Halifax, the Woolwich and the Alliance and Leicester when they gave up their mutual status.

The cross-party Building Societies Group said that consumers could lose out if societies succumbed to pressure from members to change status and float on the stock market.

The group said the Government needed to consider changing the laws on membership voting and nomination of directors.

The group's chairman, the Labour MP, Andrew Love, said: "Building societies play an extremely important role in financial services and without them consumer choice and diversity on the high street would be in danger of disappearing."

Andrew Love: standing up for consumers

"Unlike banks" he explained, "they do not have to pay dividends to shareholders. This means that they can offer cheaper mortgages and pay better interest rates on savings."

The warning comes after official figures showed societies were flooded last month by "carpetbaggers" opening new accounts in the hope of windfalls.

The group believes it is unacceptable that societies' branch offices were being besieged by people opening accounts in hope of a payout.

The MPs also threw their support behind the board of the Nationwide. The UK's largest society wants to stay mutual but is facing a threat from rebels who are standing for election as directors on a flotation ticket.

Mr Love said it was wrong that a small group of members should be able to cause "this level of disruption" and said the democratic process was being "severely abused".

A Treasury spokesman said: "We have no plans to review the legislation." He said the issue of conversion and flotation was a "matter for informed decisions by the members of the building societies".

Last month, societies attracted £1.844 billion, more than double the £878 million deposited in May, according to the Building Societies Association.

Abbey National, Cheltenham & Gloucester, Halifax, Alliance & Leicester, National & Provincial, Woolwich and Northern Rock have all converted, giving their members one-off windfalls worth thousands of pounds.