Monday, 30 March 2009

Dunfermline Building Society - What's the Score?

I have savings with the Dunfermline Building Society. I chose to put my money there after the Woolwich and other mutual organisations I invested in went "private". On three ocassions (at least) I voted against organisations I was a member of going down the path of de-mutualisation.

I chose the Dunfermline precisely because it was a mutual, it gave no indication of demutualising, it invested in personal mortgages, I assumed that it had safe and sensible investment and return policies and it would not be swimming with the financial sharks.

How wrong I was. The revelations that the Dunfermline had large investments in the commercial market with the consequent risks, that it had bought mortgage packages from Lehmen's and others and that it had embarked on a vainglorious IT expansion came as a bombshell to me.

Much has been made of the UK government's role in the sale of the Dunfermline. But I have a fairly robust attitude to these things. The management of an institution has the responsibility for safeguarding that institution. If they take rash decisions or make dodgy investments, they carry the most responsibility for the consequent problems. Bleating that the FSA or the Treasury should have stopped them is no defence. It's like a burglar, on being sentenced to a few months in the chokey, blaming the police for not stopping his nocturnal activities.

The one thing I am grateful for is the UK Government's policy of ensuring that savings are secure. This is a welcome change from the crisis management of previous governments during recessions and is greatly to be welcomed as a huge leap forward in public policy.

No comments:

Post a Comment