David Prosser: Nationwide needs to clean up its act

Everyone loves the fat bank manager in Nationwide's advertising campaign, which so cleverly exposes the unscrupulous tactics of leading banks. But it's a campaign that's starting to wear thin - Britain's biggest building society seems to be embracing many of the nasty practices that it claims to despise.

Several months ago in this column, I criticised Nationwide for a series of problems - and particularly for its refusal to rule out introducing current account charges. I hoped it would make a New Year resolution to restore the gleam to its halo. Sadly, the plea has gone unheeded.

Just this week, Nationwide was fined £1m by the Financial Services Authority, for failings related to a curious affair last summer. A burglar stole a laptop from one of its employees and it then took more than three weeks for executives to realise the computer contained sensitive and confidential information about customers.

Both Nationwide and the FSA refuse to say exactly what the information included - the laptop has never been recovered and they are concerned that criminals might try to use the data - but given the large fine, it was clearly pretty serious.

It's another black mark for Nationwide, but at least executives could claim this is a one-off case they can make sure never happens again by overhauling systems and procedures.

That is not the case with the disgraceful approach that Nationwide has taken with customers who have had the nerve to challenge it on rip-off unauthorised overdraft charges.

Regular readers of Save & Spend will know that all current account providers are facing thousands of demands from customer for refunds of these fees, which can be as high as £30 a day. The challenges follow a judgement last year by the Office of Fair Trading that similar charges in the credit card sector were illegal, a ruling that is expected to be extended to the banking sector any day now.

In the absence of the formal OFT ruling, however, many customers have threatened to take their current account providers to court over the charges, at which stage the banks have usually caved in and refunded the fees.

Nationwide is refunding charges in such cases too. But it also seems to be leading a fightback by the banks, often closing the accounts of customers who take it to court.

Nationwide's argument is that it is simply closing the accounts of customers with whom its relationship has irrevocably broken down. I'd put it another way. It looks increasingly likely that the OFT will rule that Nationwide has been breaking the law with its overdraft fees. Its customers have understandably said they want their money back. Nationwide, having been caught out, has then had a big tantrum and taken its ball home.

The society is not alone in closing disgruntled customers' accounts - many of its rivals are doing exactly the same. But Nationwide is alone in running a holier-than-thou advertising campaign based on a claim that it behaves much more fairly than its rivals. Too many of its customers are discovering that Nationwide isn't always as different as it claims to be proud to be.

n n n Nationwide's behaviour is particularly disappointing because it is the flagship of the mutually-owned building society sector. But we shouldn't tar all mutuals with the same brush - elsewhere, societies are continuing to prove that their status can deliver real benefits for members.

The Britannia Building Society, for example, this week it announced it would return £51m in profits to customers through its membership reward scheme - the average windfall is £56.

It's a good example of how societies should be operating in the interests of their customers - and why people should choose them, all other things being equal, in preference to the biggest banks. Let's hope Nationwide returns to the fold sooner rather than later.

d.prosser@independent.co.uk