Norwich & Peterborough Building Society members could be forgiven for thinking their society already offers structured products, since this is how the life-backed Keydata products that brought it into negotiations with the Yorkshire have been presented in both the mainstream and specialist press. In fact it does not, and the proposed merger of the N&P into the Yorkshire Building Society could - education notwithstanding - add a potential 20% to the larger society's structured products distribution.
The Yorkshire, which now includes the subsidiary Chelsea and Barnsley Building Societies, is a client of Credit Suisse, which has made a successful business out of UK building society distribution. Since February the Yorkshire has been distributing inflation-linked products, such as the two currently on offer. Both are five-year products, one paying income at 0.1% pa plus 100% of April-April inflation, and the other a growth version paying a minimum 101.5% at maturity.
Norwich & Peterborough has been fined £1.4m for failing to advise customers about the risks of investing in Keydata's Lifemark products. It also agreed to pay £50m in compensation. The society posted a full-year £48.9m loss for 2010 after taking into account Keydata compensation. It made a £900,000 profit in 2009.
The FSA said an internal N&P compliance report pointed at problems with the Keydata sales as early as 2007.
The enlarged society would add N&P's 500,000 members to its existing 2.5 million. It would retain the N&P brand.