The Maverick Taking on Nationwide: James Sherwin-Smith & Why Every Member Should Exercise Their Democratic Right to Vote

For the first time in 21 years, members of the UK's largest building society will see real choice on their ballot paper. Nationwide is the country's second-largest lender, but fewer than 4% of its 9.1 million eligible members typically vote at its AGM. And the last time someone stood for election from outside the boardroom, Tony Blair was Prime Minister.

My guest today is trying to change all that. James Sherwin Smith is a fintech executive, former senior MasterCard executive, and Oliver Wyman strategist who has studied the cooperative movement, and he's attempting to become the first member-nominated candidate on the Nationwide ballot since 2005. To get there, he's been through an FCA hearing, collected 350 paper nomination forms by hand, and gone toe-to-toe with the board over access to the member register, and all that just to become nominated.

In this episode, we get into why he's doing it, what the Virgin Money acquisition revealed about Nationwide's governance, why mutuals matter for everyone, not just their customers, and what every Nationwide member needs to know before ma- ballots land in June ahead of the AGM vote in mid-July. I'm Jeremy McEwen, and this is "In the Company of Mavericks," a podcast where we help serious active investors navigate market volatility, protect capital, and uncover new ways to confidently grow wealth in these radically uncertain times.

However, what you're about to hear is not any kind of advice, but just for your information and hopefully your entertainment. I'm not your advisor. You should take responsibility for the decisions you take about your wealth. Please enjoy my conversation with the maverick, James Sherwin Smith.

Brought to you by Progressive Equity. So James, thanks for joining. It's great to meet you and find out about you. Can we start just there?

Who are you, and how did you end up running a campaign to be elected to the UK's largest building society? Jeremy, first of all, thank you so much for having me on the podcast. I love the title, right? I like being considered a maverick.

So I'm James Sherwin Smith. My background is in financial services, strategy, consulting, and then latterly in fintech and payments. Over that time, I've spent a lot of time looking at how institutions actually serve their customers, not just commercially, but also structurally how it works. Nationwide is unusual in retail financial services because it's a mutual society.

That's how it's defined in the FCA. It's the largest building society in the country, second-largest lender in the land. And because it's a mutual, it is governed by a one member, one vote policy. So if you're a shareholder bank, you'd have shareholders, and you get one vote per share.

But in the mutual model, it's one member, one vote. And so it should make it one of the most accountable, arguably, financial institutions in the UK because it has nine point one million members that are eligible to vote in the upcoming election. When I looked at it closely over the last couple of years, and I studied the cooperative sector actually back in two thousand and eight when I was working at Oliver Wyman, I began to see perhaps a bit of a gap between the principle of how governance should work and how it's actually working in practice.

The last couple of years of me studying how Nationwide is performing and behaving has led me to stand for election, so I will be the first member-nominated candidate on the ballot for election to the Nationwide board in twenty-one years. The last person to do this was in two thousand and five. They were not successful. Nationwide has had a history in living memory of member-nominated directors serving on the board, and there was a period in the nineties when three served on the board concurrently, so about twenty-five percent of the board seats were member-nominated.

So that's the bit of the history. It's a bit about me, but really looking forward to the conversation and digging into it. When was the moment in that process that you thought, "Right, I'm gonna do this"? 'Cause it's a big campaign.

You don't do these sort of things lightly. It's a great question. So I think if I wind the clock back to March of twenty twenty-four, so just over two years ago now, Nationwide announced that it was planning to buy Virgin Money. Yes.

So Virgin Money is a listed bank. It actually trades as Clydesdale Bank trading as Virgin Money, so there's a whole load of history around what built up to become Virgin Money. But basically, Nationwide, a mutual, was making an offer to buy a listed bank, and that kind of piqued my interest, and I kind of looked into it and I tried to understand why, what real benefits would come to me as a member of that acquisition. I also had in the back of my mind, well, surely this should be put to a vote of the members.

The board said, "No. A vote is not required," and they basically pushed f- quite aggressively on the timetable to basically buy Virgin Money. And I ended up supporting a gentleman called Michael Armstrong, who was running a petition at the time to say Nationwide members should be given a vote on the Virgin Money deal. That was obviously not a successful campaign.

A vote wasn't held, although Virgin Money shareholders, of course, got to vote as to whether they should sell their shares. Yes. Nationwide members never got a vote as to whether they wanted to buy it. And at the end of that time, Michael Armstrong was de-banked by Nationwide.

That kind of made me pause for thought because at that point I'd been working behind the scenes, but that whole process just made me quite interested in how Nationwide was performing, how it was being governed, what the health of that was within the lens of this report that I'd written back in two thousand and eight about the cooperative sector. And at the end of that summer, I basically said, "You know what? I've studied the law. I've studied the rules.

There is a route by which a member can be nominated by their fellow members and be on the ballot and then be put forward to election, and potentially be elected to the board." My feeling- And certainly some of the evidence suggests that members just aren't engaged as they should be in the running of the society. I think really why I'm doing this is because I think there should be much greater member engagement, and I think there should be a strong member voice directly representing members' interests round the board table.

So you've obviously studied this industry for a long time. Are you of the view that the acquisition of Virgin Money was the wrong thing to do, or is it just a matter of principle around the ability of the members to be able to sanction this move? On Virgin Money itself, I just don't know. I just don't have enough information, and that's part of my concern- Yeah which is there just isn't enough transparency into why this deal was done.

There's some nice- It's too early to know in, in the context of M&A. What we do know is most M&A doesn't work. Integrating retail banking institutions is enormously complex, and the benefit realization won't be known for many years. Actually, when Nationwide set out to say that it wants to buy Virgin Money in the actual M&A documentation, it basically said, "It's gonna take us six to twelve months to understand what we've bought, and then it'll be a multi-year journey thereafter to actually integrate what we've bought."

But there is no plan that we as members have seen, and we don't know how it's performing against that integration plan. We don't know what the costs are, we don't know what the risks are, and we have a very high-level assessment of what the benefits might be. And on some of those, there hasn't been a great deal of proof. So Virgin Money deal, let's put it to one side.

I just don't know, and that's one of the reasons why I think members should have greater transparency and understanding. On your second question, yes, the principle really matters to me. Yeah. Which is the spirit of the law suggested that there should have been a member vote.

And for me, that's indicative of the low level of member engagement, and we can see that in the number of people that turn up to the AGM. We can see that in terms of the number of people who vote at the AGM. I think the Virgin Money deal basically is a catalyst for my interest and my concern. The reality is, if I'm elected to the board, we just have to make a good of it.

We have to do the best job we can with the integration. We can't turn back the clock. That's the way I'm approaching this. It begs the question of the level of member information that a voting member of the Nationwide...

I mean, maybe one of the reasons engagement is so low because they're not informed. Would you compare the information on how the performance of the Nationwide to its members compared with, say, a listed bank? So let's think about the different intervals. Annual accounts are produced at Nationwide, right?

Very detailed annual report, as you'd expect from any PLC. Bear in mind, of course, that the primary legislation that governs building societies is the Building Societies Act of nineteen eighty-six, not the Companies Act of two thousand and six. So it's different primary legislation they're operating under. But the building societies have regard to the corporate governance code and the principles of, say, Section one seven two, Duties of Directors under the Companies Act, right?

And they make reference to that in the annual accounts. There's the annual report, which is, I think, a very standard, market standard, I would say, with a PLC in terms of the depth of information there. Obviously, you've got all the capital requirements, all the risk registers, the kind of detail of the accounting, et cetera. And there are interim statements made, but you don't have the same scrutiny as I think you would get with a PLC having quarterly investor calls and the level of transparency and analysis that goes alongside that by equity analysts and other shareholders.

And I think that's where the disparity creeps in in terms of transparency and scrutiny. From my perspective, when I think about this, Nationwide's takeover of Virgin Money and the integration that's ongoing, I can't think of another large retail banking integration that's been less scrutinized than Nationwide buying Virgin Money, right? Lee, I think on top of it going, are we getting- Yes synergy benefits? What are the- Exactly risks?

And we don't have any of that as a member looking over the shoulder of what Nationwide and Virgin Money means to members. I was wondering whether you were gonna say you can't remember any being successful, but maybe I'm just a bit too- Different conversation for a different day, perhaps. Isn't the wider point that we're dealing with an institution or a set of institutions because this is the largest of several building societies that we have in this country? You'll know better than me, there are smaller number than there used to be, but Nationwide is the biggest.

But it's a bit of an anachronism, isn't it? I mean, didn't Co-op Bank show us that this model really struggles- I- in the modern world of banking and finance? So I absolutely disagree with that. I think mutuals are incredibly relevant and perhaps more relevant than ever today.

And I cast my back to writing a report in two thousand and eight about mutuals. Okay. And the problem at the time that the mutual sector was facing was the European Union was looking at mutuals across Europe going, "You are a blocker to harmonization. You are these domestic champions with lots of capital that aren't gonna start buying things cross-border, and you're gonna prevent harmonization in Europe, right?"

A year later, the mutuals are the only ones that don't need to be bailed out. Right. Yes. Right?

Okay. They are safe, they are secure- Yeah they are conservative. But most importantly, and the thing that always sticks in my mind from writing that report with Mark Vile was there was this classic Oliver Wyman chart, which was a XY scatter plot of on the X-axis, what is the size of the mutual sector expressed as a percentage of deposits in that country? So you've got some that are very mutual, that are mighty- France has got quite a lot of these mutuals, hasn't it?

The French do. Yeah. The Dutch do. Yeah.

'Cause, you know, Rabo. The German, you've got the Raiffeisen. In Italy, you've got the Bank Popolari, right? When you think about the wider set of what a mutual is, there's actually quite chunky mutuals in those respective countries.

So that's the X-axis, right? So how big is your mutual sector measured as a percentage of deposits in the country? On your Y-axis is the number of complaints to the ombudsman per ten thousand people. It is a perfectly inversely proportional relationship.

That is to say, the larger that your mutual sector, the less consumer harm there is in that country. And the reason is, if your mutual is owned by its members, the mutual is incentivized to do right by its customers. There are no profits to be extorted elsewhere into- Yeah shareholders' pockets. Okay.

So mutuals do what's right for their customers by their very model design, and as a result, they provide an important competitive force on the rest of the banking sector Thanks for listening to this episode of In the Company of Mavericks. The engagement and listener numbers have grown strongly in recent months, which is great. Increasingly, my guest recommendations and introductions have come from listeners, people like you. If you have anyone you know or follow that you think would make a good guest on In the Company of Mavericks, then I'd love to hear from you with the idea or, even better, with the introduction.

Please contact me via LinkedIn, Substack or at jeremymckeown@gmail.com. Even if it's just to say hi, give me some feedback about the podcast or perhaps subjects you might like me to cover, I'd love to hear from you. So Nationwide is owned by its members.

What does that actually mean? There's a difference between what it's set up to do in theory and how it's exercised in practice, right? So the members are the ultimate owners. They have voting rights.

They elect the board, and the organization should therefore act in their collective interests. In reality, ownership is quite diffuse, right? You can imagine in the building societies, associations and the industry group that represents the building societies have this exact chart in the paper they write about membership engagement. Imagine a pyramid of member engagement, right?

At the top of the pyramid, you've probably got people like me, the sad cases that really like dig into the detail, like really care about governance, scrutinize the financial reports for mistakes, you name it, right? They're super engaged. They really care. They've probably got a level of skill and experience that they can apply to the problem.

So those are the few people perhaps at the top of the pyramid. At the base of the pyramid, you have some people that just don't care. They are customers. It's just another bank to them.

They don't really understand the difference to a building society and a bank perhaps even, and they're not engaged at all. And then you've got clearly flavors between up and down the pyramid. From my perspective, for a mutual to be vital and to deliver on its purpose, you want more engaged, active members. But to do that, they need to be informed, they need to be educated, and they actually have to have some choices.

And this is one of my concerns, which is there hasn't been a choice on the ballot for twenty years. There hasn't been an alternative candidate. All you could do as a member is turn up and say for and against, but there was no one you could actually choose for and vote against to affect a different outcome. There were as many candidates as there were seats on the board.

That was not how building societies were set up, right? That's why there is a Legal route in statute for either board-appointed candidates or member-nominated candidates. And it's the exercise of that legal structure and those rights that I think is where we've lost our way and where I'm trying to basically increase the level of engagement and democracy to basically end up with better outcomes. If we don't have mutuals behaving like mutuals, we don't actually have the benefit of mutuals being in the economy.

So presumably, with your attention to detail, your knowledge of the industry, your passionate sense of the benefit of having a building society, a mutual bank doing good work in our economy, when you engaged with the board saying, "I'd like to become a member director," they greeted you with open arms. I did not expect this process to be easy, but I didn't expect it to be quite this hard. So it's taken a lot of work. I was not successful in the first year, and I can talk about that experience, but I was successful the second year running.

Just to get onto the ballot. Just to get onto the ballot, let alone, you know, I feel like I've still got a mountain to climb. But as one supporter said, "Yes, but you've made it to base camp, and you can't climb the mountain unless you get to base camp." I like that analogy- Yeah 'cause I think that's exactly right.

But yeah, it's been a process. It's been a robust process, I can say that, but it has not been easy, and I think it could have been made easier. So this time last year, or actually no, a little bit earlier, March of last year, March '25, I had a hearing with the Financial Conduct Authority because I'd used a statutory right to apply for a copy of the member register. In the Company's Act, if you're a shareholder, you can go, "I'd like to inspect the shareholder register.

I'd like to know who the shareholders are. I'd like to be able to contact them." The Building Societies Act has a similar right, but not identical, in that the right in the Building Societies Act is adjudicated by the regulator. So the FCA is now the Mutual Societies Regulator, and so the FC...

you apply to the FCA. The FCA writes to the building society and say, "X wants to access the register. What do you say?" Building society says, "We object," and the FCA then has to decide, and e- either party can request a hearing.

In this case, both of us did, and so we had a hearing at the FCA, I think the first one in 30 years. And you sit down in a room with all the FCA and their lawyers, all the society and their lawyers, and me. Right. And turned up with a couple of scribes, so someone took notes for me.

And you just basically have the arguments for and against, and then the FCA goes away and decides. And in this case, they declined my application. So I was using that to say, "I'd like to stand. I need to get to members, not only for them to nominate me, but also for them to elect me."

Yes. And I would like to be able to write to them or email them to basically say, "This is what I'm doing and why I'm doing it, and I'd like your support." But that was denied in March of last year. What grounds was your denial made?

So the legal arguments initially were, "You can't do this, the Data Protection Act," right? The reality- Yeah Protection Act comes after the Building Societies Act, and the Data Protection Act has a very clear clause which says, "If there's a preexisting legal right, we don't trump that." So I was like, "No, no, this is not a Data Protection Act issue." The argument then became, "Well, you can have the data, but you won't be able to use it because you want to email people because it's-" Cost effective, and that falls foul of the Privacy and Electronic Communication Regulations, which are basically there to stop you spamming people.

To which I said, "I'm not spamming people, I'm conducting my own household affairs. I'm not an organization, I'm not a company, just a guy who wants to write to fellow members under the statute right to be able to communicate with people to say, 'Would you nominate and vote for me?'" It was interesting that the FCA took that view from my perspective, because ultimately the PECR is something for the ICO. It's not- Uh, sorry, p- yeah, I can't keep up with you.

The Information Commissioner's Office. The P- The PECR, the Privacy Electronic Communication Regulations, which say- Gotcha. Yeah can you spam people or not? Yeah.

And the answer is obviously not- Yeah if you don't have their permission to do so. Yeah. But there is a process you could design which would make it a very clear- Yes. Yeah privacy by design process, and you could abide by the rules.

But the FCA basically said, "No." And I was like, "I think that's the Information Commissioner's Office decision to make- Okay if I've done something wrong after the event- Yes not you using it as a reason not to give me the data in the first place." But they still said no. They still said no, and I appealed, and then they said, "You can't appeal.

You can complain." So I complained. They took eight months, and they gave me some money for taking a really long time to handle my complaint, which still said no. So how did you get on the ballot this time then?

A lot of work in using my personal network, my private network through LinkedIn, through some email lists that I basically built up over time of people that supported what I was doing. So you still don't have access to the members' register? I do not have access to the register. No.

I haven't applied yet. How many members need to nominate you to get onto the ballot? To be on the ballot, you need 250 nominations from qualified two-year members. Now, qualified two-year members is an interesting test because basically it means you're over 18, you've been with Nationwide for at least two years, and throughout that period you have consistently maintained a balance of £200 or more in your current account, savings accounts or mortgage.

So if you've got a long-term mortgage, i.e. more than two years, you're probably good to nominate. If you've got a current account, good luck, 'cause you're likely to have dipped below £200 at some point in the last two years.

Sure. So you have to basically identify a subset of the members that are actually eligible to nominate. It's a difficult thing. And then to be clear, it's also, you have to submit paper forms.

So I had to submit paper forms from individual members which gave me their name, their address, their signature. Personally identifiable information you have to trust a complete stranger with, and I was required to collect all those as a bundle and deliver them to a society rather than just saying, "Why don't the members just send it directly to you? There is no reason for me to see this information. You just need to count to say they're valid.

In fact, we could even have a digital process. They could do it through your app. Let's make it easy." That request was denied, and so instead what I'm asking for people to do is deliver a whole load of paperwork to me, trust me with their data so I can then send it on to their own society to say I have the requisite nominations.

And you have to do it probably more than you need because a whole bunch will be basically said as they're invalid or ineligible and they get- So they presumably- crossed out they struck a few off the number you- I needed 350. Yeah. I had 256. Okay.

So I scraped over the line with six above the requirement level. And how much of your time in the last 12 months has this taken you? That's a really good question. I probably haven't been very good at- Perhaps I should ask your wife.

I don't know. She would definitely tell you it's a lot more than I think it is. I would imagine it's been at least a day or two a week for the last year. There's been up and downs in that period, right?

There's been some periods where it's been fallow, and some periods have been incredibly intense because you have to do it by a certain deadline for the financial year-end. And so, you know, frankly, February and March was close to sixty, seventy percent of my time on this. So well done for getting to base camp. Thank you.

You're on the ballot. Yes. Talk us through the process for those listening who may be nationwide members. What's the process from here?

How do you reach Everest? So to get to base camp, yes, I have to submit the nominations, the requisite nominations. I also have to submit a deposit check, five hundred pounds, which I will lose if I do not get sufficient votes. And you also have to submit a election address, which is, in theory, what will be circulated in the voting pack to say, "Who are you voting for?"

There'll be some blurb about me, what's my skill and experience, and why am I standing for election. So you have to submit those by the financial year-end, which is the thirty-first of March. There then begins a process of vetting. So who is James?

Is he who he says he is? Is he a criminal or not? Does he have the education that he states he has, references, et cetera. And then there's also interviews by the board nomination committee.

So I've been interviewed by five board members. At that point, the board then needs to go away and decide whether to recommend me or not to the membership. And that has a big bearing in terms of how I'm probably displayed on the ballot, as well as a separate mechanism called the quick vote, which when I submitted my nominations and my covering letter, I said, "Please, can you suspend this in the interest of fairness?" Let me explain why.

So at the top of the ballot form, both in the electronic version you'll get if you get an email to say vote online or on the paper form, if you still get paper documents, the very first option on the ballot paper is the quick vote. It is a single checkbox which says, "Your board recommends that you vote for all resolutions and for each of the candidates standing for election and re-election. If you're happy with this, simply put your X in the quick vote box here, then sign and date the declaration below."

What that's effectively doing is saying, "I'm appointing the chair as my proxy to vote as the board recommends." Now, that's not a big deal when there's no choices on the ballot. But in a year when the first time in twenty-one years that there'll be an alternative candidate, the board recommendation and the quick vote could have a material impact on my likelihood of being elected. Assuming you don't pass muster with the board.

There are three easy scenarios to imagine. Yeah. Board recommended and the quick vote. Board not recommended and the quick vote.

Yes. So the first two are either very positive for me or very negative for me. And then the third, which is suspend the quick vote, which basically reduces the impact of the board recommendation. So that's what's still to be decided.

The board is currently deliberating on that. They're due to decide later this month in May, because in early June, ballot papers will start to land in people's inboxes and post boxes, and people will then have the opportunity to vote from that point forward until the AGM on the fifteenth of July. So that 15th of July is the day of the vote, but there's a lot of jockeying for position prior to that The reality is most people have submitted their votes in advance. Okay, yeah.

Very few people vote at the AGM because there were more people that nominated me this year than attended the 2024 AGM. And this is out of, remind me, nine million members. So 9.1 million members are eligible to vote.

670,000 people voted last year. So not very democratic at all, really. Well, it's an interesting comparison, right? So when I wrote my Times Op-Ed piece, I drew the comparison with how many votes are cast for the High Street banks in their AGMs, and therefore, how much of a mandate do those organizations really have.

And if you're a listed PLC, because it's one vote per share, and you've got lots of institutional shareholders that vote in large blocks of shares, there is comfortably a greater than 50% mandate for board resolutions. Yeah, as a retail investor, I mean, you might vote, but you might just think, "Well, I've got bigger investors-" Professionals, they'll scrutinize it. Yeah. And if, if the board are up to no good, there are processes in place.

There's non-exec directors. It's obviously not foolproof. It, no process is. Yeah.

But you've got a layer of protection in a listed company as a retail investor. Absolutely. Then other people and other bigger interests are on your side. In y- this case, what you're saying, you don't have that.

So there's 16.4 million members. 9.1 million are eligible to vote.

Okay. Only less than 700,000 actually. Yeah. So the mandate is, like, 4% of the ownership base, right?

And of course, of those 4%, circa over 85, 80/90, 95% of them use the quick vote. So the steering of the electorate via the quick vote is significant. And so from my perspective, I basically said, "Look, if I'm going to be successfully nominated, I'm gonna p- be on the ballot, please suspend the quick vote. Make this a fair election," right?

This is a way to put that into practice. And have you had a response on that request? You- No, the board is still deliberating. Okay.

So they will decide am I recommended or not. Will the quick vote be used or not? And there's probably some other key questions to think about as well. How many board seats are there?

The last two people to be successfully nominated and elected as member-nominated candidates unseated existing board members seeking re-election because there were N plus one candidates, right? There was one extra candidate for the number of board seats. And so that's another dynamic that the board need to think about, which is, do they want to risk a member-nominated candidate unseating a board-appointed candidate? How many board members are there?

I think there will be 11, so nine seeking re-election, two seeking election for the first time, having been appointed in the year. And is that a set number, or can that be a flex? No, I don't think there is a set number. There's obviously corporate governance code requirements in terms of maximums, I believe, and there is a statutory minimum stipulated in the Building Societies Act, which I think is only two or three.

But I think there is some flex between those extremes. I want to tell you about a specialist financial training business called Finance Talking. I know the team there well. Finance Talking's experienced trainers provide education around capital markets and the basics of business finance and communications.

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Now back to the episode. What about the credentials? You obviously know what you're talking about. You've done your homework.

What are your credentials? Not anyone can rock up and become a ned of a public listed company, and NatureWise obviously is not a public listed company, but it's- Well, it is regulated it's an important organization. It's regulated. How has that process been conducted?

Give us your pitch. Obviously, the betting and interview process was to look into my skills and my experience, my knowledge of, you know, governance and regulations, the duties of a board member, et cetera. So I am a member of the Institute of Board Members. I'm conducting various training and events with them.

My quick CV, I was a dot-com entrepreneur at school, which paid for university and beer. I went into management consulting at Oliver Wyman after graduating Oxford with a degree in engineering, economics, and management. I spent eight years at Oliver Wyman advising retail banks and building societies on their strategy. I went into industry.

I worked for MasterCard for the large portion of this career, both in a consulting role but then also in an executive role managing critical national infrastructure. I joined VocaLink at a point it was being bought by MasterCard. VocaLink runs all of the infrastructure in the UK for retail payments, so that's Bacs, faster payments, the LINK ATM network, and the cheque and credit clearing system for image-based cheque clearing. So critical national infrastructure is deemed by the National Cybersecurity Centre and an entity that is supervised by the Bank of England because of its significant importance as a financial market infrastructure provider.

My role at VocaLink was to basically take the UK IP and help commercialize and operationalize that and around the rest of the world, which then basically means you're running the payment systems for national economies in different countries around the world. That's kind of my most recent financial experience. But also during the time I was actually between jobs, I was a fintech CEO, so I helped build a company called Growth Street, which was a FCA-registered business. So I was under the then regime, a controlled function one, controlled function three, as a director of the board and a CEO of that business.

So I have some familiarity with Regulation. I have some familiarity with what it takes to put customers first in a regulated environment. Obviously, with the Vocalink acquisition by Mastercard, I was front and center on the executive team undergoing a massive integration of a thousand-person firm into a twenty-thousand-person firm. So hopefully, I've got some relevant experience that when members read my election address or consider voting for me, they'll think, "Well, actually, yeah, this guy might have some useful experience," as well as clearly being, you know, from the membership and being quite passionate about the future of Nationwide.

Sounds like they should appoint you immediately and not worry about going through all this- I'm okay with the process, right? the motions of members. No, no, I'm, I'm- I know you're being facetious, but democracy is really important here. Of course it is.

Yeah, that's very clear, and it was a facetious comment, but my, uh, sort of the serious point there is sounds like you should be running the place rather than just as a non-exec director because you obviously understand the banking industry, the payments industry. That's a pretty damn impressive CV, if I may say so. Being a non-exec director and being a non-exec chairman, not of a listed or big company, but smaller companies, you've got to sit there and help people do their job.

You're not doing the job for them. There are different skill sets. I can only imagine the administrative detail and due process involved in being a director of such a large organization of Nationwide or any other company of similar size. I've no direct experience, but I do know as an investor and observer of these things, it's a critical role.

Being a NED is different from being an exec, clearly. It's a non-executive role, right? This is about governance. This is about holding the organization to account, holding management to account.

I think a non-executive director should be a critical friend. It should be someone that- Yes is supporting the growth of the organization, supporting it in its strategic aims, but asking the difficult questions to make sure that things are running the way that they should be run. I have no desire to be an executive at Nationwide, right? I've left that part of my career.

I think it's now clearly over. I do hope that I have something to contribute in a non-executive capacity that can bring some of my executive experience to those conversations, and that's the way I would approach it. It's a bit like being a parent in some ways, isn't it? You can't run your kid's life for them.

You have to know that you're there when they need you, and being a critical friend, I think, is a good way of summing it up. You also, in that context, have to have some form of vision, some form of direction of travel for the organization that you're legally responsible for. What, in your view, is that future for Nationwide? So Nationwide has a strategy.

It has four pillars, and I don't disagree with those statements. Being a beacon for mutual good is one of the four, and I think the interesting question there is what does that mean, right? Being a modern mutual, how should that be done from a member governance perspective? That's the part that I look at and think I have something to contribute there based on what I think that means, what other members have told me what they think that means, and their support of my campaign.

I want to be very clear, right? I want Nationwide to be a mutual. I want it to maintain being a building society. I want it to basically act as close to the line on what a mutual means as possible.

Because as we mentioned earlier, right, having a strong mutual in a market doesn't necessarily mean it's just good for the customers of that mutual. It's good for everybody. We'll all end up with better products, better service, better prices if there is a mutual in the market keeping the publicly listed banks honest. That's the line that I want Nationwide to walk.

I think a lot of people look at someone like me doing what I'm doing and have it with a nineteen nineties lens, 'cause that was the last time this was really happening. Yes. And they think carpetbaggers and wanting to demutualize- Yeah all this kind of stuff. Absolutely not.

No. Okay. It's not in my interest whatsoever, and the board have been very clear that is not their interest either. Also, let's go one step further, recognize that since nineteen ninety-seven, Nationwide has this thing called the charitable assignment, which says, "If at any event, for whatever reason, we demutualized, if you remember post ninety-seven, that money goes to charity."

So the incentive isn't even there. What I think is important is that mutuals are held accountable, and my concern creeps in when mutuals behave like banks but are not being held accountable- Yeah like banks. Sure. It falls between two stools.

Just one random thought I had when you were talking about the way it presents its results and updates its members and communicates with its members and makes its potential member director go and collect physical forms and jump through all those hoops. What about a members' webinar on issues of the day on, you said there's only a few hundred people turn up to the AGM. Well, is there an online option? Do they have webinars of- You've hit another one of my pet peeves.

So Nationwide has a virtual only AGM. It is the only building site in the country that is virtual- Okay only. Okay. Every other one you can turn up in person.

Some of them are hybrid, so you can turn up online and in person, and we were talking about PLCs and democracy earlier. I was delighted to see that BP lost that resolution recently because BP went to its shareholder and said, "We want to do virtual only AGMs," and it was rejected. And I think it's really important that we have the ability to turn up in person unfiltered. Yes.

To basically queue in front of the microphone- Yeah and say your piece, and not only have that question put to the board and the CEO or whoever else is there, but also for the other members to hear the question and react to the answer. Because if it's done in a way like we're doing this podcast, you're in a little tiny virtual room, and you don't get line of sight to all the other questions people asked, how the board has decided to prioritize the list of questions and run out of time for the ones that are- Yeah you don't have that transparency, and I think that is a big mistake.

I think you're onto your question now, but I had to correct you on that because, yes- Yes Nationwide has a virtual AGM. It has had online access to the AGM, I think, since the year two thousand, but it's only recently that it's decided that virtual only is the way forward, and it's something that I have a problem with. But how do you get those sixteen million members, those nine million voting members- Yeah more engaged? I think the problem that we have, if I come back to my pyramid analogy, is that you have the Annual reports once a year, which is something that really interested members, really engaged member to ask questions, form questions for the AGM, which may or may not be answered.

And that's a single one-year event, and that's the only thing that I can think of as a member owner where you can go deep. The rest of the year, I think all the communication is for the base of the pyramid, which is some nice fluffy headlines that sound good, but if you want to scratch the surface, you cannot. There is nothing in between. You know, we talked about PLCs having quarterly reports and analyst calls and all the rest of it.

That facility does not exist at Nationwide, right? It exists perhaps in bond holders, but I don't see a place where I, as a member equity owner, can participate outside of the annual general meeting. Nationwide runs a panel called Member Voice, which is something you can opt into, which is effectively the market research, so running surveys and things like that. But the types of thing you're describing, which is kind of more town halls frequently throughout the year, other ways that members can congregate, I don't think they exist at all.

And there used to be things like talk back events and things like that in the past, but one of the principal problems I had with getting the nominations was, how do I go and find other members? You could go to a branch- Hang, hang out around branches. Well, that's it. And I tried it.

Who goes to branches anymore? But I tried it, and exactly that. Like two things. One, who goes to branches these days?

And second of all, who is happy to talk about money on the high street with a stranger? Yes. They basically look at you, think you're, you're a guy with a clipboard, you must be a chugger. Yes.

I actually do not want to talk to you. And I understand that. But if you take away a physical AGM, if you take away any other ability to meet with members during the year, how can anybody, without being incredibly digitally savvy or having a very powerful personal network, do what I've done? Obviously, your focus is on getting from base camp with Nationwide, but what's the wider issue here in terms of other neutrals, other building societies in the UK and the democratic deficit, as I think you've called it at Nationwide?

So democratic deficit was The Guardian's terminology. Sorry. That wasn't my phrase. But I understand why they said it, because you've got a number of issues.

You've got virtual-only AGMs, you've got non-binding votes on executive pay. Why is that allowed? Just because building societies aren't part of the Companies Act doesn't mean that I don't think there should be binding votes on executive pay. You've got a lack of member-nominated directors on the board.

That last one seems to be a particularly building society problem. So if you're a occupational pension fund of a certain size, by law, one third of the board seats- Yes go to member-nominated trustees or directors. If you're the cooperative group, not the bank, but the actual supermarkets, et cetera, four of the board members are member-nominated directors. One of them is currently sitting as the interim CEO after the CEO had to step down.

And you look at that and you think, "This looks like a particularly building society problem now," and yet the right is enshrined in law for members to nominate their own director for election. So why has this happened? I think it's extremely hard, right? It takes a lot of work, and I think a lot of people might be put off from that.

But I think the building societies could help meet candidates halfway on this. There are things I think that could be improved, but if they wanted to encourage more members to put themselves forward, they could do that It takes a certain degree of skill and experience that we mentioned before. You would have to pass muster with regulators, you have to be fit and proper. But you are one member on a board of ten, 12 people, so I don't see a great deal of harm in having a direct member voice represented there, even if they don't necessarily have exactly the same depth of experience as other professional board members.

The 250 nominations is a high bar, and it actually varies from 50 to 250 based on the size of the building society. But that number was made five times harder by statutory instrument in the year 2000. So there was an amendment to the Building Societies Act to say, "We want to make member governance activities five times harder." Five times harder to nominate a director, five times harder to bring a resolution to the AGM, five times harder to ask for a special general meeting.

And I think it was a classic case of closing the stable door after the horse had bolted. It was post the demutualization wave, and I think the government at the time said, "You know what? Mutuals are important. We shouldn't let any further demutualizations happen.

Let's make it a lot harder to make this happen." So in what way was it five times harder? It raised, so for me, to getting 250 nominations. Yeah.

That number used to be 50. Okay. To call a special general meeting, that number is 500. It used to be 100.

So- That's because people like you in the 1990s were the carpetbaggers, not the- People not like me- champions of mu- who were carpetbaggers. Yeah, sorry. People doing what you're doing now. Correct.

And so- I think that there's just been this increase in the hurdle, which has, I think, made it largely impossible for most people to do what I'm doing. It's cut these organizations off from the connection with their membership, and therefore, some of the hoops that you've had to jump through and still remain in your path are not deliberately put there by the people who are already on the board of Nationwide, for example. No. But other things like the quick vote have been.

It'll be the acid test for you, isn't it? There's been a real boiling frog- Yes problem in my mind, right? Bit by bit the rules have been changed, right? So that there was some statutory changes in 2000, but bit by bit the rules have been changed over time.

I use the word on my blog, debased, right? It has debased the membership to a degree. Yeah, of course. It's made it a less vital concept, and it's made member governance much, much harder.

James, I've learnt a lot. I've really enjoyed our conversation. Let's just be very clear at the end here, what can listeners do to support your cause for achieving the goal that you're campaigning for? Just set out the timetable and what the deliverables are.

Sure. So my message is simple. If you're a member, you're an owner, please use your vote. You will start receiving ballots in early to mid-June, either by post or in your email.

That will be the opportunity for you to vote, and that window is from that time in June all the way through until the date of the AGM on the 15th of July. In fact, you can even turn up to the AGM itself and cast your vote if you've not been able to cast it previous to that time. So please exercise your vote. There is choice on the ballot this year.

I would really recommend that more members are engaged. And if you're not a member of Nationwide, but you're a member of different building society, please think similarly. Please think about exercising your vote. If members don't hold the board to account, there is a real risk that the mutuals don't act and behave like mutuals, and we need them to do that to hold the bigger banks to account.

You've made that case very clear, so thanks very much, and hopefully we can deliver some ticks in boxes or whatever it is you're being asked to do to help you on your way. So thanks so much for talking today, and I'm gonna follow your progress with great interest. I'm not a Nationwide member, but you've definitely made me think about the importance of mutuals in general, but particularly in finance in a different way. Thank you.

I've really enjoyed the conversation. If people want to learn more about me, more than happy to find me on social media, but my website is perhaps the most comprehensive. Um, I don't know if that can be added in the show notes, but if it can- I'll definitely will add that, yeah James digit four nationwide.co.

uk. Okay. Good luck. Thank you very much, Jeremy.

It's been a pleasure. Here are a few things to take away from this conversation. First, mutuals matter, and not just for the people who bank with them. The evidence is clear that a strong mutual sector keeps the wider banking market honest and makes our financial system safer.

Second, Nationwide has a democratic deficit. Less than four percent of eligible members vote, and a single quick vote tick box steers most of those votes straight to the board's recommendation. Whether the board suspends the quick vote this year will tell you everything about how seriously they take the idea of member democracy. Third, this isn't about demutualization.

James very much wants Nationwide to remain a mutual, but crucially, he wants them to walk the walk and behave like one. He's done his homework, and from what I can tell, he is eminently qualified. Ballots land in June. The AGM is on July fifteenth.

If you're a Nationwide member, you're an owner. Use your vote. You can learn more about James's campaign at James number four nationwide.co.

uk, linked in the notes below. If this episode made you think, please share it with someone who banks with Nationwide and ask questions about how member director nominations work at your building society. If you're still listening, you might like what I post on Substack, where I write hypernormal times, all one word, and post other content for subscribers. I dive a bit deeper into the financial world we inhabit and attempt some joined up thinking about how we investors might gain fresh insights into what it all means.

Please check it out and subscribe. It only takes a few seconds. Thanks for listening, and hope to see you over there soon. Brought to you by Progressive Equity.