22 October 2016

Mutually-owned companies starting to show their advantage

James Daley

By James Daley LinkedIn

Fairer Finance's Autumn 2016 ratings are now live on our site - and mutuals are dominating. But a small, savvy group of their competitors are coming after them.

Our Autumn 2016 ratings are now all live – the culmination of a lot of work which often isn’t apparent to even regular users of our website.

There are a few companies that move up, a few that move down. But most of the usual suspects stay at the top of the table, and vice versa.

One trend that appears to be hardening is the strong performance of mutually owned businesses (which are owned by their customers) at the top of our tables.

Mutual domination 

Mutuals now top five of the nine sectors that we look at – bank accounts, mortgages, savings, car insurance and travel insurance.

And in the other four sectors – you’ll find a mutual in the top five in all but life insurance (which is tellingly the only sector where we don’t include customer polling).

From a customer happiness perspective, mutuality appears to be working. Customers are starting to appreciate that being part of a mutual means that you are an owner of the business, and should be the beneficiary of a more customer-centric approach than some of the privately held companies around.

PLCs in pursuit 

But a small number of shareholder-owned companies make it to the upper echelons of our tables as well. These are the ones that I remain most interested in. The companies that are tangibly investing in their customer experience today, and taking a longer term approach to the success of their business.

Lloyds is one of the best examples here. We’re continually impressed by the work they’ve been doing online – and in their customer documents to make things clearer. Each half, their transparency scores – across all of their main brands – improves. Not in every sector, I should hasten to add. But it’s all beginning to add up to something.

Lloyds also has also made some great improvements in its complaints handling over the past few years – taking itself from being one of the worst in its peer group, to one of the better companies.

As you’d expect, its customer satisfaction scores still lag. It takes time to change perceptions of customers who have been with you for years, and may have formed some fairly unflappable views. But these too have been improving.

And of course First Direct – another privately owned bank – also continues to top most customer happiness polls, and has done for many years. Its transparency scores are always much lower in our tables, however, and it definitely still has work to do there. 

Mutuals fall short on transparency 

Interestingly, the mutuals often do worse than you might expect on transparency. A lack of resources and a focus on other elements of customer engagement have often left them lacking in an area where we’d expect them to be leading the way.

What Lloyds has done over the past few years should be a wake up call for those brands who have been used to dominating the top of our tables. Companies that address their complaints handling and transparency can quite quickly start to take on the businesses who have very loyal and happy customers. And of course the improvement in customer happiness scores should follow for the Lloyds of this world.

Companies that aren’t fighting to hold onto their places at the top of the table may quickly find they’re not there anymore.

We were interested to see that Metrobank dropped out of our gold ribbon category in bank accounts this time – for the first time since our ratings began two and a half years ago.

Its complaints handling and transparency simply aren’t good enough. Many of its customers are coming to the end of their honeymoon phase with the bank and I wouldn’t be surprised if we start to see these ratings slip as well over the next few years – unless the money is invested in walking the walk, not just talking the talk.

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