The decision prompted industry speculation that the building society was planning to demutualise.
From 1 June, all customers opening a savings account with the Kent Reliance BS will not have to waive their rights to a payout should the company ever demutualise.
Previously, all new customers had to surrender their rights in order to protect the building society from carpetbagging – a practice that saw many consumers open savings accounts with building societies in a bid to receive a windfall sum in the event of a take-over.
Rob Proctor, deputy chief executive at Kent Reliance, admitted it had decided to reverse its stance on charitable assignment, but denied it had any plans to demutualise. He said: “We introduced the charitable assignment scheme in 2000, because carpetbagging was becoming commonplace. However, evidence suggests that this is no longer a threat. This does not mean Kent Reliance BS is planning to demutualise.”
Despite this, Rachel Blackmore, head of external affairs at the Building Societies Association (BSA) said the move seemed unusual. “We do not comment on individual firms, and the decision by Kent Reliance Building Society would not have been taken likely. However, charitable assignment is still regarded as a useful weapon against carpetbaggers and we do not expect any other societies to follow in the footsteps of Kent Reliance,” she said.
Rob Clifford, managing director a Mortgageforce, shared this belief. He commented: “It is certainly a bold move by Kent Reliance Building Society and it is likely that it will invite transient investor interest. Carpetbagging was very much a growing phenomenon prior to the introduction of charitable assignment.”
