Skipton Building Society
|Founded||1 May 1853 (Skipton)
|Headquarters||Skipton, England, UK|
|Key people||David Cutter, Chief Executive|
|Net income||£22.2 million GBP (December 2011)|
|Total assets||£13.9 billion GBP (December 2011)|
The Skipton Building Society is a building society in the United Kingdom (also known as a mutual lending and savings organisation as it is owned by the members). It is a member of the Building Societies Association.
The Society was established in 1853 in Skipton, North Yorkshire, where it remains headquartered. It is the UK's 4th largest building society and has over 750,000 members and 100 branches. Its pre-tax profit was £36.4 million for 2012, although this profit was earned by one subsidiary and the society made a loss. Also, important questions remain over SBS's solvency, given it and its group companies high exposure to sub-prime debt. The Society has 15 subsidiary companies, mostly in the financial services industry These include Connells Group, one of the largest estate agency networks in the UK with 485 branches across the country. In 2010, it merged with the Chesham Building Society, founded in 1845, which was at the time the world's oldest surviving building society.
David Cutter is chief executive of the Society, following the dismissal of the former chief executive, John Goodfellow, on 31 December 2008. Goodfellow later chaired the UK Student Loans Company before and during its highly public 2009/10 Student Loans Failure and was subsequently fired by the incoming Conservative administration due to his and his company's failures.
Skipton has been involved in numerous controversial activities and mergers, such as hiding losses made by subsidiary companies from members and the authorities through rearranging group structure (see below), buying core IT systems from near bankrupt software companies owned by friends of the Chief Executive of SBS without checking their status (later having to bail them out by SBS using £10M of members' money - see below), breaking promises publically made by David Cutter the Chief Executive regarding tracker mortgage interest rates citing "exceptional circumstances" and merging with other societies where the extent of staff losses and branch closures were grossly under-estimated and promises made to staff broken. See below.
As such, despite recent insignificant profits, questions remain unanswered about Skipton Building Society and its group's solvency. If the company had been more open, less questions may have been asked.
 1853 - The Skipton Permanent Benefit Building Society is established at a public meeting in Skipton, West Riding of Yorkshire, held at the old Town Hall (unpredictably, now a pizzeria). Samuel Farey (1822-1895) a cotton mill owner and George Kendall, a timber merchant, are amongst the founders of the Society. They are benevolent, wealthy industrialists who have prospered from the Industrial Revolution of the 1800s, establishing the new Society as a safe place to deposit savings, with a return on investment offered.
1854 - First Annual Meeting of Skipton and District Permanent Benefit Building Society is held. The Society has 223 Members and £2,951.16s.8d in balances.
1879 - 1,185 members, £47,129 balances.
1892 - Head Office moves to 11 Newmarket Street from its home at the Old Post Office.
1895 - Samuel Farey dies, aged 73.
1903 - The Society becomes incorporated. It now boasts 1,532 Members and £82,305 in balances.
1921 - The Head Office moves a few yards along the street to numbers 5 & 7 Newmarket Street, Skipton.
1922 - Branches open in Nelson, Blackpool and Lytham, soon followed by branches in other towns and cities.
1923 - Henry Smith's (the draper's shop at 59 High Street) is bought in Skipton, with a view to demolishing the shop to make space for a brand new Head Office.
1928 - The new Head Office in Skipton town centre is opened by The R.t Hon. Philip Snowden, Chancellor of the Exchequer in the Labour Government.
1929 - In the year of The Wall Street Crash, the Society holds assets of £1 million.
1945 - The Second World War ends and the Society holds assets of £5 million.
1950 - Assets double in five years to £10 million.
1953 - The Society celebrates its Centenary, holding assets of £11.7 million.
1956 - Assets rise to £14 million.
1958 - Assets stand at £15 million.
1963 - Assets grow to £25 million.
1974 - Assets have now reached £100 million.
1977 - Assets stand at £150 million.
1978 - A five-storey extension to the rear of the High Street Head Office is built, to house over 200 staff. It occupies part of the site where the first office opened in 1853 (in Providence Place). This year also sees the installation of the very first computer (a Burroughs B3700) in the new Skipton Administration Centre. Skipton Building Society now has 32 branches and 75 agencies throughout the UK, holding more than 125,000 accounts.
1990 - The Bailey, the Society's modern new premises on Harrogate Road, Skipton is built.
1992 - John Goodfellow becomes Chief Executive, profits fall by 50%.
1998 - The Bailey is further extended.
2005 - Featured in Private Eye magazine after hiding £30Million of losses at subsidiary CallCredit PLC and buying its main computer system from near bankrupt IT company, JADE software corporation.
2008-10 - Closes sub-prime lending vehicles, with over £1,920,000,000 of members' money (around 20% of total members' money) lent to potentially risky, sub-prime clients. Most of this debt remains, leaving uncertainty about SBS's solvency and ability to repay its members' deposits.
2009 - Takes over the former Scarborough Building Society; numerous redundancies and branch closures despite previous promises of no redundancies.
2010 - Skipton Building Society merges with The Chesham Building Society - at the time, the world's oldest surviving building society, founded in 1845.
The Scarborough Building Society had encountered difficult trading conditions which had a significant impact on profitability and a weakening of the Society's resources. As a result the board of The Scarborough concluded the effect of continuing UK house price instability and growing prospect of recession, the best way to protect its members' interests would be to seek a buyer.
Scarborough's former Chief Executive, John Carrier, retired on 31 December 2008.
After the take over, all employees from the original Scarborough Building Society were made redundant and the headquarters was moved to Skipton.
Former Chief Executive John Goodfellow's tenure at SBS was characterised by overwhelming hubris and over-simplification of issues. Involving himself throughout the group despite his limited knowledge and ability, Goodfellow increasingly extended SBS's complexity upon the wave of easy profits during the "Bull Years" of the 90s and early 2000s whilst trying to maintain strategic control and still micro-managing the group with his presence on almost every group board. His cache of one line phrases, such as "It's only a line of code" whilst referring to a £400,000 computer project or "It's just a piece of wire" about a £3,000,000 branch communications system, whilst showing possibly noble hints of strategic vision totally failed as any adequate planning and budgeting was totally neglected. Projects were budgeted as "£1 Million" or "£2.5 Million" as more of a guess undertaken on the back of chain-smoking Goodfellow's cigarette packets. Due to this, SBS subsequently made increasingly risky and wrong decisions in its business activities, and when problems occurred, they were hidden with the succour of the SBS group board (see below).
Goodfellow's annual paypacket of £630,000 was the highest for any Building Society chief. In 2008 Goodfellow received £1,244,000, despite him being required to leave early from his service contract. He was also allowed to accrue pension benefits in the Skipton Building Society Pension & Life assurance Scheme until the end of 2009. Skipton waived any early retirement discount factors applicable to his benefits in the scheme, enabling him to access his £2.3 million pension pot from 10 January 2010 without fear of any penalty. Goodfellow later became Chairman of the UK Student Loans Company and was subsequently sacked by the government after various significant and public failures at that organisation mainly relating to IT, Goodfellow's "speciality" (various press. 2010). After his failures and mistakes at Skipton Building Society and the Student Loans Company, Goodfellow is now chairman of PayDay loan, IVA and low-class loan company Mitchell Farrar Group.
When Skipton announced it was taking over the Scarborough Building Society in November 2008 society chiefs told staff no jobs would be lost compulsorily in the process. However just months after the assurances 30 Scarborough jobs were lost when the societies merged and it made public on 27 January 2010 that a further 90 job losses are in the pipeline. The Scarborough Building Society site was initially occupied by Skipton subsidiary HomeLoan Management Ltd, but was later abandoned and is now for sale.
Skipton reneged on its promise to keep the SVR tracker no more than 3% above base rate citing an "exceptional circumstances" clause in their agreement, potentially putting thousands of borrowers out of pocket. On 4 March 2009 Skipton CEO reiterated that Skipton had made the 3% pledge and would keep it.
Skipton angered borrowers on its standard variable mortgage rate (SVR) by backtracking on this promise. A petition was started against the rate rise, against which it is reported that the Society faces a legal challenge. High profile objectors to the rise include Which?, also known as the Consumers' Association whose chief executive, Peter Vicary-Smith said, on 21 January 2010 "We can't see any justification for this unexpected hike in Skipton's SVR", the Daily Mail, whose personal Finance Editor Jeff Prestridge, said on 30 January 2010 "Financial Mail maintains Skipton's abandoning of its SVR guarantee is indefensible" and Martin Lewis, MoneySavingExpert.com founder, who said on 18 February: "This sort of irresponsible rate rise destroys any faith the public has in the mortgage system."
Skipton suffered a serious breach of data security in 2009 when over 3,000 savers received financial details about other customers. When Skipton mailed 108,000 account statements to savers on the weekend of 23–24 January 2010, 3,115 went out with the name, account number, balance and interest earned in the previous year of different customers printed on the reverse of the letters. This followed an Information Commissioner's Office finding, in 2008, that Skipton was in breach of the Data Protection Act, following the theft of an unencrypted laptop left by a third party contractor at a gym. The unprotected information lost included names, dates of birth, national insurance numbers and investment amounts of 14,000 customers.
Skipton Building Society was featured in the "In The Back" section of Private Eye Magazine in June 2005 after it failed to disclose a £30 million loss at CallCredit PLC, a subsidiary company, and the John Goodfellow sponsored purchase of a £3.5 million core IT systems from a loss making IT company which it subsequently had to rescue at the cost of £10 million of members' savings. Despite SBS's involvement JADE Software Corporation has continued to suffer losses. The loss making subsidiary, CallCredit PLC, whose loss amounted to a similar amount to SBS's profit for that year was SBS's biggest commercial investment to date. Shortly before the loss, Callcredit PLC was moved from being a direct subsidiary of SBS into a subsidiary of Eurodirect as the loss was being made. As such it moved from being a subsidiary of SBS where its operating profit would be required to be published, and became a subsidiary of a subsidiary of a subsidiary of the society (Eurodirect being a subsidiary of Skipton Information Group, itself a subsidiary of Skipton Group Holdings Ltd, a subsidiary of the society). This allowed the losses to be hidden for at least a year and absorbed through hiding them "beneath" other profits.
SBS state [on this page through their edits] that: "However, Skipton's strategy to continue investing in Callcredit was vindicated when it sold the business in December 2009 for over £100 million generating a profit of £44 million." This statement neglects to reveal that the sale also included the highly profitable EuroDirect Database Marketing Limited and GMAP consulting subsidiaries as well as CallCredit into the "Callcredit Information Group" - ironic given that SBS moved Callcredit to being a subsidiary of Eurodirect (see above). It is not known what profit, if any, CallCredit benefitted the Society's members. It is vey hard to image any justifiable reason or reasons that would support the movement of CallCredit PLC, Skipton biggest investment to date, being moved from being a direct subsidiary of SBS to being a remote, subsidiary of a subsidiary of a subsidiary of a subsidiary operation, other than to hide the £30Million of losses from SBS's members, the regulatory authorities and beyond (perhaps the credit markets). This is especially prescient given that the sale promoted on this page was of "CallCredit information Group". It may have been that the executive directors of SBS would not have received their annual bonuses if the group profit for that year had not been at a certain level, but that cannot be confirmed, only inferred through the SBS report of the following year.
Skipton Building Society previously owned a number of "sub prime" lending companies. One remains - as with the others - created during the "Goodfellow" years. This subsidiary, "Amber Homeloans" (previously Skipton Mortgages Limited) closed to new business in 2008 with the message that new business would not be accepted, by which time the company had grown to around £1,500,000,000 of sub-prime, high risk loans or "assets" (mortgage loans) as described by SBS, many of which were undertaken in the disastrous US sub-prime market. Any revaluation of these assets may have an extremely severe and negative effect on Skipton's balance sheet and indeed, its solvency and ability to repay its deposits and creditors.
Skipton Building Society's credit rating has increasingly been reduced by major credit rating agencies over the last years, especially due to its sub-prime activities such as lending honest savers' savings to sub-prime mortgagees in the US; risky unsecured loans and car insurance debtors in the UK etc. etc; A further decline in the SBS rating occurred when it was recognised that the UK government is likely to be unwilling to bail it out in event of insolvency.
SBS have also regularly edited this page and attempted to supress and delete negative information about themselves.
- Chesham Merger Announcement Skipton Building Society
- Jeff Prestridge (2007-04-15). "Building society fat cats". This is Money. Retrieved 2012-05-27.
- "The loss of mutual affection at Skipton". FTAdviser.com. 2010-01-28. Retrieved 2012-05-27.
- "90 Scarborough jobs scrapped by the Skipton - COMMENT ON THIS STORY - Local". Scarborough Evening News. 27 January 2010. Retrieved 27 May 2012.
- "Skipton Building Society to cut 90 jobs". BBC News. 2010-01-27. Retrieved 2012-05-27.
- Thomas, Paul. "Brokers hit the roof over Skipton ceiling | News". Money Marketing. Retrieved 2012-05-27.
- "Skipton pledges to pass on any base rate cut in full". FTAdviser.com. 2009-03-04. Retrieved 2012-05-27.
- "Angry Skipton borrowers turn to Facebook - This is Money". Blogs.thisismoney.co.uk. 2010-01-29. Retrieved 2012-05-27.
- "Skipton faces legal challenge over mortgage rate hike". Moneysavingexpert.com. Retrieved 2012-05-27.
- [dead link]
- Jeff Prestridge (2010-01-30). "JEFF PRESTRIDGE: Skipton sinks lower with a new betrayal | Mail Online". Dailymail.co.uk. Retrieved 2012-05-27.
- Jeff Prestridge (2010-01-30). "FSA set to hit Skipton with heavy fine for data breach | Mail Online". Dailymail.co.uk. Retrieved 2012-05-27.
- Nikki Sandison (21 February 2008). "Skipton found in breach of Data Protection Act - Media news". Media Week. Retrieved 27 May 2012.
- Private Eye 18 June 2005, p68
- Skipton Building Society
- The Skipton Group
- Building Societies Association
- KPMG Building Societies Database 2008
- KPMG Building Societies Database 2009
- Annual Results for FYE 31 Dec 2008