Your questions answered

Please advise why it has been decided not to issue postal voting packs for the AGM?

We contacted all eligible Members who had an email address registered to advise them that we will send their AGM Notice and Summary Financial Statement to them via email, unless they opt to have a hard copy. Our aim is to reduce our carbon footprint by reducing the amount of paper used in our AGM. In 2024 we sent 215,583 emails (versus 108,000 in 2023) and 128,591 paper packs (versus 209,000 in 2023).

To make the online experience as simple as possible, we made a number of improvements to the system including a quick vote option and ensuring that necessary codes populate automatically. We are pleased to confirm that the changes made have resulted in an increased amount of votes cast this year compared to last year’s AGM.

Whilst at LV, did Simon Moore have any involvement in the failed attempt to remove the mutual status from LV?

We confirm that Simon Moore joined the Board of London Victoria Financial Services Limited in June 2022, which was after LV= members rejected the sale to a private equity firm.

Simon has experience of public, private and mutual company boards, as well as a career in the financial sector. He has a grounding in regulation, governance, risk, compliance, financial performance, customer service, executive remuneration and member relationships. We believe this will give him the skills and capabilities required as a member of the board and to contribute to the continued success of the Society.

Who makes up your Board and why do we only get to vote for the Board and not Executive Committee?

The Society Rules state that the size of the Board should be between 7 and 14 Directors. At the 2024 AGM, 8 directors stood for election or re-election. Simon Moore and Shimi Shah sought election in line with the Section 25(5) of the Society’s Rules. The other directors sought re-election in line with the Society’s Rules on retirement by rotation which allows for a director to be eligible for re-election without nomination.

Raj Marhawa (Chief Risk Officer) and Rob Regan (Chief Operating Officer) are members of the Executive Committee (the most senior management committee), they are not Board directors. The only two members of the Executive Committee that are Board Director’s (Executive Directors) are Julie-Ann Haines (Chief Executive Officer) and Iain Mansfield (Chief Financial Officer). Appointments to the Executive Committee fall under the remit of Julie-Ann Haines to appoint her leadership team and manage the Society. Only Board Directors are voted on by Members and only their biographies and remuneration are listed in the Annual Report.

Sally Jones-Evans plans to step down as Chair and Director, subject to Simon Moore’s successful election as a Director by Members and whilst we await regulatory approval for him to become Chair. We did this to ensure a smooth transition is achieved.

A rigorous and thorough recruitment process is undertaken ahead of Director’s standing for election. Candidates are sought in various ways, including through press advertisements and with the assistance of external search consultants. Candidates must meet the tests of fitness and propriety as prescribed by the FCA and must receive approval, where necessary, from the PRA and FCA before taking up their role.

An effective Board comprises individuals with the right mix of knowledge, skills and experience. We include a summary of the director’s knowledge, skills and experience in their biographies on our website. Ensuring this objective is achieved is one of the responsibilities of the Chair, supported by the Governance & Nominations Committee. Each year a review of knowledge, skills and experience is undertaken and a matrix recorded to inform any recruitment needs or training requirement.

Why was Simon Moore’s photo and biography not included in the Annual Report and Accounts?

The Annual Report and Accounts covered 1 January 2023 – 31 December 2023. Simon Moore was appointed to the Board in January 2024. Simon’s biography was included on page 5-6 of the Summary Financial Statement and also on our website.

Why does Principality Building Society continue to preach about a Fairer Society and then pay proportionately bigger bonus payments to those who get paid the most?

We disclose Executive Remuneration in the Summary Financial Statements and the Annual Report and Accounts. Yesterday, we noticed a formatting error on the Executive Remuneration table on page 87 of the Annual Report and Accounts. Although the figures were correct, the headings were in the wrong places. This version has been corrected and replaced on our website. We are aware that it was downloaded 144 times. The Summary Financial Statements sent to all Members with the Notice of AGM was correct.

Over the past few years we've undertaken work to align the majority of our benefits across all levels of the organisation to ensure colleagues are treated in a fair and consistent way. The benefits which are the same include our matched pension offering, life insurance, critical illness insurance, private medical insurance eligibility at 1 year's service, and access to our full suite of self-funded flexible benefits. Our approach to benchmarking salaries is also consistent across all grades and levels. In addition, we no longer offer car allowances based on a colleague's level of seniority.

There are a small number of benefits which are applied differently depending on a colleague's grade, which supports our ability to be competitive in the marketplace, and to enable us to attract and retain great talent. The benefits which are different include executives receiving family cover under BUPA, and additional holiday entitlement for the senior leadership team, although all colleagues reach the same maximum holiday entitlement over time.

In relation to variable pay, we think it’s right that those with the most senior roles, who carry the responsibility for the direction of the Society and its success over the longer term, have a greater proportion of their overall pay package linked to performance. For this reason, in addition to the Rewarding Excellence Award (which all our colleagues participate in on exactly the same basis), senior leaders participate in the Leading Excellence Award which links their variable pay to the successful delivery of their roles and responsibilities as senior leaders. This type of structure, with the proportion of variable pay increasing with responsibility, is typical of organisations of our size, structure and sector, and in our view it’s more sustainable and flexible than having higher levels of fixed pay.

The Remuneration Committee approves Executive remuneration. Remuneration packages are benchmarked and set at a level to attract and retain talent at all levels, which is a key driver of Principality's ability to operate successfully. As detailed in this year’s Director’s Remuneration Report, our CEO pay ratio currently stands at 14:1 which has remained consistent over the past 3 years.

Have you considered rotating your external auditor?

We last re-tendered our independent external auditor in 2016, so will be looking at this again shortly. We are required to re-tender our external audit every 10 years with mandatory rotation of auditors required after 20 years. We consider the performance of our independent external auditor annually at the Audit Committee. We also consider the fees paid to our independent external auditors which are benchmarked against other firms of similar size and complexity.

Principality is committed to sustainability and becoming carbon neutral, yet uses other organisations and suppliers who are not. Why?

We take our ESG responsibilities extremely seriously and have recently finalised a new impact strategy, outlining our ambitions as a responsible business. You’ll read more about this when we produce our first impact report later this year.

We’ve embarked on what we know will be a long journey, already setting the target of being net zero in our operations by 2040. And are working with partners to achieve that, finding ways to significantly reduce our carbon footprint and offsetting the emissions we produce. You can read more about how we do this and how we manage the risks of climate change in our TCFD report. We’re working with selected suppliers to influence their progress to net zero.

Colleagues who manage some of our biggest supplier relationships have received training in how to support these suppliers on their own net zero journey and we’re already seeing an uplift in understanding and commitment to reducing CO2 emissions within our supply chain. For new requirements, our supplier selection criteria and due diligence includes sustainability and we are actively seeking ways in which to contract with like-minded suppliers.

Does the society's environmental commitment stretch to supporting nature and wildlife initiatives? Does it have any partnerships with organisations such as the RSPB or county wildlife trusts?

Our colleague-led Planet Friendly Network runs numerous activities across Wales supporting nature. Ranging from tree planting, litter picking and community gardening. The Network also works closely with Green Squirrel, a community based charity that supports community based action on climate and nature.

How is Principality going to react to ensure a long term future remains secure? Are there any plans to merge with other building societies?

The Society does not have any active plans to merge with other building societies. The main way to ensure the Society’s long-term future is through good performance, having strong capital, strong liquidity, investing for the future and offering good value to its Members.

The performance shows that the Society can thrive and has earned the right to have a sustainable future. 

Is it a conflict of interest that the board of Directors, that decide on sponsorship of the Principality stadium, are the same people enjoying free hospitality tickets for events over the past few years?

We took the decision to sponsor the stadium back in 2015 and agreed a 10-year sponsorship arrangement with the WRU on commercial terms. During the negotiation, in compliance with our procurement processes, no hospitality tickets were accepted. Subsequently, hospitality has been utilised in line with the contractual arrangements agreed.

We saw the sponsorship as an opportunity, both to build awareness of the Principality brand on a local and national level, and also to allow us to offer Members, customers and colleagues unique experiences, competitions and pre-sale tickets to events such as the Guinness Six Nations.

The Board is satisfied that the way we distribute tickets is fair. Our procurement policy ensures that if there is any negotiation or contracting with any supplier or third party, including the WRU, then decision makers are not allowed to benefit from any hospitality or gifts.

Please note that all board Directors are Members of the Society and our Rules require them to maintain a minimum deposit of £1000 in a Society savings account.

With a general election due before the next AGM, has the Society been in representation with concerned parties with regard to future financial policy?

We are in regular dialogue with the Welsh Government on a number of matters, including the future of policy decision making in Wales. We understand the next general election could result in some instability and uncertainty in the UK more generally and in making our financial plans, we conduct scenario analysis to try and assess how future financial policy and the economic environment in which the Society operates might be impacted. We are satisfied that through a range of scenarios, the Society’s performance remains strong for the foreseeable future. The Society’s Chief Executive Officer is also currently sitting on the Prime Minister’s Business Council.

Is there an opportunity to vote through the medium of Welsh?

Members can vote in Welsh. Members are welcome to change their preferences to receive communications in Welsh and will receive all AGM correspondence and voting forms in Welsh. Members may also ask a question in Welsh at the AGM.

How long is Principality committed to keeping its high street branches open?

Our commitment to the High Street remains strong – in February 2022 we promised to keep all of our branches open until at least the end of 2025. Feedback from Members continues to confirm that having access to cash and services is vitally important to them, and we see our presence on high streets as a key part of what we offer as a Member-owned building society.

This goes against the trend we are seeing across the rest of the UK and while our Members continue to use, value and recommend our branches, these will form the bedrock of our service offering.

How does the Principality support vulnerable customers, especially during this time of pressures on the cost of living?

Assisting our customers during times of financial hardship is a key priority for us, especially in mind of the current cost of living crisis where household bills and the cost of every-day items are steadily increasing. We recognise our Members face ongoing challenges posed by the cost of living and market uncertainties.

We remain committed to supporting all our Members, and for those who need additional support from us, we are investing in future capability to better support. We are focused on providing outstanding customer service, and therefore have worked hard to provide our colleagues with more tools and guidance to support the needs of our customers.

As part of this process we continuously review our customers’ needs and respond accordingly, and we work with external organisations, aligned to our regulatory requirements. We would encourage anyone who needs support to contact us.

When will we get an app?

We continually review how we can best meet the needs of our Members and consumers who are thinking about placing their savings with us or borrowing money to help them finance buying a home. This includes looking at how Members can interact with us either in person or using digital alternatives.

We are currently working on a number of customer focused initiatives to simplify and improve our online experience and access to it. Whilst an app is not currently one of these, we are constantly striving to make things easier for our customers and Members.

Will you introduce an ATM card so that I can take out money on holiday?

At present we have no plans to provide cards to allow cash withdrawals from an ATM. Please speak to one of our branch staff next time you visit as there might be other ways we can help you access your savings when you are on holiday, such as electronically sending money to your current account (if you have one).

Will Principality allow the government access to our accounts?

The proposed measures are included within the current Data Protection and Digital Information Bill and as the Bill is not yet law, the requirement is not known at this stage.
We assure you that Principality Building Society takes its responsibilities for the protection of Members’ personal data seriously and we would only share personal data where there is a clear legal requirement to do so.

What is Principality’s position on cash and its commitment to cash?

Cash usage had increased in the last 12 months having fallen substantially as a result of Covid19. The Society is trialling OneBanx in Cowbridge, where customers of 23 other banks can access and pay cash into their personal and business bank accounts from within our branches.

Will you introduce Faster Payments for ISA?

We want to ensure we offer the best possible customer experience to our Members, so we are looking at developing our electronic payment capability for ISAs.

Why can’t I invest more than £20k in an ISA?

We want to offer as much flexibility to our Members as possible and are reviewing the permissive (optional) changes that have been made to the ISA regulations with effect from 6 April 2024, such as paying into multiple ISAs, and considering how best to move forward with them.

When are you going to raise savings interest rates?

We constantly review our interest rates to ensure we are offering fair value to our Members and have a number of products which are priced towards the very top of the market, such as the Online Bonus ISA. We change prices regularly to react to market changes and continue to offer the good rates we can across our product range.

Why are your mortgage rates so high?

Our rates have had to rise due to the increase in base rate - from 0.1% in 2022 up to 5.25%. In order to remain competitive in the savings market and offer fair returns, we have had to offer increased savings rates, but we have tried to mitigate this in our increases to our mortgage customers.

We do try to offer preferential rates to our existing mortgage customers when their fixed rate deals end and we continue to review rates as the Bank of England changes their base rate. Our mortgage product range is updated every 3 - 4 weeks to ensure we are offering the most up to date mortgage products.

With the potential for a more positive economic outlook in 2024, we will seek to pass on any opportunity to lower mortgage rates for our Members.

Do you lend to local governments?

The Society does not lend to local governments. The Commercial Team would love to do some more work e.g. joint venture with local governments but councils usually have avenues to provide other funding.

The Society is building relationships with Welsh Government, the council, housing associations and communities.

Why don’t we have a loyalty account?

The Society had loyalty accounts in the past, however the current strategy is about offering great rates to all Members; there are a range of strong products e.g. regular saver product at 6% and branch products.

The Consumer Duty regulation has changed the landscape of how certain products are offered as the focus is on bringing great value to everyone. We are consistently paying above the market in our savings offers, and special rates are offered at maturity for existing customers only.

Why doesn’t the Society offer less than 12 months fixed products?

Based on feedback from the branches, a lot of customers are opting for the 2-year fixed rate products due to the uncertainty in market rates. We have not seen a trend for customers asking for shorter fixed rates.