Podcast Summary
Chief Executive on the Budget and Saffron's AGM
Following Alistair Darling's much-anticipated Budget and Saffron's AGM, we talked to Andy Golding about what both of these annual events. Firstly, what did Andy Golding have to say on the Budget?
Alistair Darling's Budget comes at a time when Britain is facing the worst recession since the Second World War, and there's been a lot of anticipation around how the Chancellor plans to get us out of it. The figures for the next few years - for example, national debt standing at around 80% of GDP by 2014 - are quite staggering. This is a level of magnitude above what most of us have seen in our lifetimes, and there's been great interest in how the Chancellor proposes to lessen the impact on the population.
With such worrying figures, there are concerns about whether the financial sector will recover. What's needed to get it back on track?
Confidence has undoubtedly taken a knock with the revelation of how far our economy has to go to recover, but we've always emerged from downturns in the past. The Chancellor explained initiatives around regulation of financial services, in a bid to prevent the collapses and bailouts we've seen in the last 12 months, and to build trust within the sector. I've always maintained that the economy won't recover until confidence recovers.
Comment on the Budget has suggested that not everyone thinks that the timescale for recovery is realistic. How long do you think it will take and what will happen to inflation and interest rates?
This recession has gone deeper than anyone could have anticipated; so to predict the start of the recovery upswing for the end of this year is I think a little too optimistic. This recession has defied many predictions, so trying to set a timetable for recovery, whilst reassuring, is a little naïve. On the road to economic improvement, past recessions indicate the potential for inflation to rise and interest rates to increase. By how much remains to be seen.
Of course, the Budget wasn't all doom and gloom - there was other good news for Savers. Tell us about the new ISA limits.
The Government has upped the level of savings you can hold tax free from £7,200 to £10,200. This covers Cash ISAs and Stocks and Shares ISAs. If you've a Cash ISA and you're over 50, you'll be able to top it up to £5,100 in October this year. Everyone else will be able to take advantage of the new limit from next April.
Why can't the over 50's top up their ISA's now?
The Government has decided that the new limit will apply to the over 50's from October, giving them a six month head-start for using the increased allowance. This also allows financial institutions time to make the necessary changes to their ISA products.
Our staff are already busy getting our ISAs ready for the new investment amounts, we'll be in touch with all of our ISA holders over 50 to make sure they know that they can top up their ISAs in October.
It's great that savers are getting more of their money protected from tax; and when rates go back up again those who have put money away in ISAs will really reap the benefits.
Was there anything else in the Budget speech which will benefit savers and borrowers?
The Chancellor has extended a number of initiatives; such as the stamp duty holiday on properties of up to £175k, and the Winter Fuel allowance has been boosted and guaranteed for another year. Basic state pension is up 2.5%, which will help those who aren't getting the returns from savings that they might have hoped for. Also, Mr. Darling is introducing recognition of working-age Grandparents who help to care for their grandchildren. The care they provide will count towards their entitlement for basic state pension.
You said that Mr Darling's speech covered the regulation of the banking sector. Did he say anything about building societies?
In the 'Financial Stability' section of the Budget, the Government recognises that mutuals are vital in providing choice in where the customer goes for their financial services; the diversity also helps drive healthy competition. It notes that an industry made up of a variety of business models adds more resilience to the sector. And finally, building societies and other types of mutual are, it says, key to financial inclusion and to the strengthening of local communities.
That aspect really struck a chord with me. We're proud to be at the heart of the local community and are very much aware of the needs of the people living in it. This is why we consider our branch network at the top of our priorities. We've been serving the area for 160 years and aren't going to forget our roots.
Which brings us nicely to Saffron's AGM! What's it for?
The AGM is the formal meeting of members with the Board of Directors. Every member has the right to attend and to vote on a number of resolutions. This normally centres on the election of directors to the board, and the appointment of auditors, but if there's a particular change to be made, such when the Society changed its name in 2006, members vote on that too. Of course, we accept postal and online voting for maximum participation. The face-to-face aspect is of particular relevance to our question and answer session, where members can put their questions to the Board. During times of financial uncertainty, a Building Society's AGM is more important than ever.
What sort of questions came from members this year?
Members wanted measures of Saffron's stability; especially after the troubles at Dunfermline and the recent Moody's downgrades on some Societies' ratings. Saffron in is the enviable position of being able to provide figures which speak for themselves. A summary of our Annual Report and Accounts are sent to every member, so they'd had the chance to look over the numbers, but you'd expect that they want to hear it from the horse's mouth.
So what did you tell them?
Quite simply, Saffron remains profitable. Our retail deposits are £100m higher than our mortgage lending, mortgage arrears have reduced from last year, and we use very little wholesale funding.
Also, we've taken these figures and stress-tested them thoroughly, so that we can be confident that Saffron will hold firm into the future.
You mentioned the Moody's rating - often taken as a measure of whether an organisation is safe to invest in or not. What's Saffron's rating?
As a smaller building society, Saffron is not rated by Moody's. Larger building societies need a way of communicating their stability to customers all over the country and their wholesale investors. Saffron's credibility is based more on our standing in the local community. If our members want any clarification on our figures or position, they're always welcome to contact us. We're a transparent organisation and welcome any questions our members might have. You can only expect people to trust you if you're honest with them!
As well as the Report and Accounts and Voting papers, members were also sent a members' survey prior to the AGM. What sort of feedback did Saffron get from this?
The survey covered a wide range of topics, and after that comment about trust, I'm delighted that 96% of respondents said that they trusted the Society to treat them fairly.
Our levels of services also scored highly across the Society (averaging at 91% across all channels) and 94% of respondents were impressed by the level of knowledge shown by Saffron staff. Members were encouraged to include comments and we had a good range of comments. Our staff received comments on their friendliness and helpfulness - I'm very proud of our staff.
Were there any areas for improvement highlighted by the survey?
Yes; following the launch of some popular products over recent months, our members said they would like to know when Saffron launches new products that might be of interest to them.
Obviously writing to all 90,000 members every time we launch a new product wouldn't be a particularly good use of funds. But I realised that they had a good point; which is why we're starting a new product emailing list. If any member wants to be added to it, all they need to do is email their name, account number and email address to marketing@saffronbs.co.uk. Hopefully that'll keep more people in the loop and help our members get more from their money.
