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Broker in Nationwide fight for little man
A Girton businessman is taking on the UK's biggest building society, Nationwide, accusing it of short-changing its customers.
Peter Free, an independent mortgage broker, is also gunning for the Financial Services Authority (FSA).
Earlier this year the FSA fined Nationwide for "failing to have effective systems and controls in place to manage its information security risks".
"In simple terms," Mr Free explains, "a laptop was stolen from an employee's home and although nobody lost any money, the FSA imposed a fine of £980,000.
"Management were responsible for the failures, but they have not personally made any financial contribution to this punishment and since Nationwide is a mutual society, of which it takes great pride, that means members reserves have been used.
"No individual accounts have been raided, but is this really the most effective way of 'having a system of enforcement that gives consistent and proportionate judgement' to quote the FSA chairman."
Mr Free continues: "Further salt is added to the wound when one probes as to the final source of this £980,000. The FSA annual report states that fines are not used to fund their activities, but to reduce the amount payable by those fee-payers who are required to contribute to membership of the FSA, Nationwide being one of them.
"How are those outcomes different, it looks like a classic smoke and mirrors trick."
Mr Free's outburst was prompted by the arrival in town this summer of the FSA's summer school, held, as usual, at St John's College, where one of the sessions was about treating customers fairly.
"I suggest the FSA needs to review is own TCF procedures if it wants to maintain consumer confidence. At the moment the FSA is like the curates egg, good in parts. Let's hope that when they return to Cambridge next summer, we can welcome a softening of heart regarding this use of fines as an enforcement tool."
Nationwide responded with: "An interesting take on the issue.
"The FSA clearly takes information security very seriously, as does Nationwide. In this instance, the FSA clearly wished to be seen to be responding rigorously and to send a clear message to the industry about the importance of information security.
"However, Nationwide now has assets of around £140 billion and reserves of over £5 billion, so there has been no impact on our interest rates. And, as Mr Free points out, not one customer has lost money as a result of this - nor will they."
Mr Free adds: "I don't have a personal axe to grind, but I don't like to see unfairness."
The FSA: "If Nationwide had not been a mutual, the fine would have been more."
Broker in Nationwide fight for little man
A Girton businessman is taking on the UK's biggest building society, Nationwide, accusing it of short-changing its customers.
Peter Free, an independent mortgage broker, is also gunning for the Financial Services Authority (FSA).
Earlier this year the FSA fined Nationwide for "failing to have effective systems and controls in place to manage its information security risks".
"In simple terms," Mr Free explains, "a laptop was stolen from an employee's home and although nobody lost any money, the FSA imposed a fine of £980,000.
"Management were responsible for the failures, but they have not personally made any financial contribution to this punishment and since Nationwide is a mutual society, of which it takes great pride, that means members reserves have been used.
"No individual accounts have been raided, but is this really the most effective way of 'having a system of enforcement that gives consistent and proportionate judgement' to quote the FSA chairman."
Mr Free continues: "Further salt is added to the wound when one probes as to the final source of this £980,000. The FSA annual report states that fines are not used to fund their activities, but to reduce the amount payable by those fee-payers who are required to contribute to membership of the FSA, Nationwide being one of them.
"How are those outcomes different, it looks like a classic smoke and mirrors trick."
Mr Free's outburst was prompted by the arrival in town this summer of the FSA's summer school, held, as usual, at St John's College, where one of the sessions was about treating customers fairly.
"I suggest the FSA needs to review is own TCF procedures if it wants to maintain consumer confidence. At the moment the FSA is like the curates egg, good in parts. Let's hope that when they return to Cambridge next summer, we can welcome a softening of heart regarding this use of fines as an enforcement tool."
Nationwide responded with: "An interesting take on the issue.
"The FSA clearly takes information security very seriously, as does Nationwide. In this instance, the FSA clearly wished to be seen to be responding rigorously and to send a clear message to the industry about the importance of information security.
"However, Nationwide now has assets of around £140 billion and reserves of over £5 billion, so there has been no impact on our interest rates. And, as Mr Free points out, not one customer has lost money as a result of this - nor will they."
Mr Free adds: "I don't have a personal axe to grind, but I don't like to see unfairness."
The FSA: "If Nationwide had not been a mutual, the fine would have been more."
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