REPORTS of the death of mutuality have long been exaggerated. Critics of the mutual model have prophesied its demise on numerous occasions, not least when Philip Williamson took the helm at Nationwide in January 2002. In the event, the UK’s largest building society has led a renaissance in mutuality.

Since 2001, Nationwide’s assets have shot up from £71 billion to £120 billion. When the merger with Portman goes through next year, the new mega-mutual will have assets of £150 billion. It will be Britain’s second-largest mortgage lender, behind only HBOS, and Britain’s largest mutual.

Yet when Mr Williamson took over, Nationwide’s mortgage market share had collapsed, members and analysts were muttering about mutuality, and the rise of shareholder-owned banks seemed inevitable. Halifax, Northern Rock and Alliance & Leicester had all been seduced by stock market listings. In 2000, Equitable Life’s spectacular implosion threw up fresh reasons to attack mutuality. Equitable’s problems were created by the actions of an arrogant cabal of senior management free from shareholder scrutiny.

Yet Nationwide has survived all this, growing to the point at which it is big enough to absorb its smaller rival Portman and leapfrog Abbey to become the UK’s second-largest mortgage lender. Mr Williamson, who steps down next April, has engineered a remarkable renaissance in the mutual sector.

Nationwide has been helped on its way by the erosion in the public’s confidence in high street banks. The old truism that customers apathetically stick with their bank whatever happens is no longer entirely true. We have instead become a nation of rate tarts, moving our loans and our cash to whichever outfit treats us best.

The high street banks have faced a barrage of criticism over the closure of branches, hidden fees and excessive charges on loans and credit cards. Nationwide has sat smugly by, watching its rivals take the flak as it points out that it has committed none of these sins.

Mr Williamson has built on the tradition of presenting Nationwide as a consumer champion, wading in to criticise the more iniquitous practices of shareholder-owned banks at the least provocation. This constant hammering home of the message that mutuals are different is finally paying off for the building society.

Members of mutuals have often been seduced by the prospect of quick windfall cash when demutualisation was on offer. Nationwide has managed to disseminate the benefits of mutuality in a way that few rivals have managed.

Mr Williamson is well paid. In 2006 his pay and bonus are worth £1.3 million. He will retire next year on a pension of £273,000 from a pot worth £5.1 million. Yet he lags behind his banking rivals. Sir James Crosby, last year’s chief executive at HBOS, took home £1.7 million in 2005 and had accrued a pension pot worth £9 million.

Although Nationwide has led the mutual charge, the benefits are trickling down to smaller societies. Despite the pessimism about their future at the start of this century, the mutual building societies have seen their total assets grow from £171 billion in 2001 to £265 billion today. Mutuals such as the Yorkshire and the Leeds are not shy to come forward with aggressive pricing and strong mortgage deals. The best-buy tables at www.timesonline.co.uk/bestbuy are stocked with strong fixed-rate deals from building societies.

However, as the Nationwide juggernaut picks up speed, members of the smaller building societies should look to their policies. The sector may be looking healthy, but it’s still rife with small players. More consolidation can be expected in a buoyant mutual sector.

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