Maybe the "dividend of mutuality" doesn't mean much anymore?

Yesterday there was another example of why treating customers fairly pays. The Yorkshire Building Society was fined £4m by the FCA for treating mortgage borrowers unfairly when they were struggling with repayments. In addition the YBS agreed to refund £8.4m to 34,000 customers.Tracey McDermott, the FCA’s director of enforcement and financial crime, said: “Customers in financial difficulty need to be treated fairly and sensitively. Firms must ensure that they are taking into account the particular circumstances affecting customers who find themselves in difficulty.”

Some of the causes of the problems were said to be poor training of staff (when dealing with customers getting into financial difficulties) and poor procedures where management were not aware of the problems.  As a mutual, mortgage customers effectively own the organisation and customer service is seen by the sector as one of their main market differentiators - they don't have to pay dividends to shareholders so they can treat their key stakeholder better investing in service for example. But it looks from this example that the Yorkshire Building Society is struggling to define what its "dividend of mutuality" really means. If it can't up its game in customer service terms, when many of the banks and competitors are doing just this, then it really needs to think hard about its future.

Chris Pilling, Yorkshire’s chief executive, said: “As a mutual organisation owned by our members, the service we give to customers is fundamental to us and we are very sorry for letting them down".  Being sorry is fine and a good start but, as the head of the second largest building society, what is he and his leadership team going to do now to make the defining difference to customer outcomes?. The mutual sector provides an appealing alternative business model to many, but in order for it to provide meaningful competition it needs to address the sector's "strategic drift" and get a grip.