Save Our Bank news November-December 2014
Direction of travel
We learned recently that the Co-operative Bank lost 40,000 customers in the first part of 2014. That was not life-threatening - the bank has over 4 million customers. However it shows there was a significant loss of confidence in the bank’s ability to deliver on its promises.
The first promise a bank must deliver on is to look after its depositors money. The financial difficulties at the bank were undoubtedly a major cause of the loss of customers. However no one doubts that many thousands of customers also lost confidence in the bank’s ability to deliver on its ethical promises. Many concluded that the new majority private owners - including the much-despised hedge funds - wouldn’t give a fig for ethics. The ethical policy would be a marketing exercise at best, at worst quietly abandoned.
The Co-operative Group - and indeed the new private shareholders - understood this danger. That’s why they decided early on to raise the bar. To persuade customers that the bank would be even more ethical, and that this would be guaranteed.
First they pledged to include a commitment to ethics in the constitution of the bank, with a new board committee to monitor compliance. Both of these they did, appointing equality and human rights commissioner, Laura Carstensen as independent chair of the new committee.
Second they said they would ask customers what should go in a refreshed ethical policy. Save Our Bank - in its first real success - pressed the bank into publicly stating that this would not be used as an excuse to drop existing ethical policy commitments. Without the option to drop anything there is only one way to refresh the policy - add new commitments.
At Save Our Bank we were pleased with the survey. It gave customers an opportunity to support moves in new directions - leading other banks in calling for responsible banking and some sort of commitment on fair pay.
Of course, raising the bar has its problems: not least how to implement. We welcome the launch of the new publicity campaign in October underlining the bank’s continuing commitment to the ethical policies it has championed in the past. There really is no room now for any watering down of those policies. But where is the new policy statement?They’ve had the results from the 73,000 people who completed the survey. We suspect they may be a debate inside the bank on how they can implement a raft of new ethical commitments - on top of the ones they already have - and focus on turning the business round at the same time.
What finally emerges as the new refreshed policy will be a real test. Not just of the commitment to ethics, but perhaps more importantly whether they really will be customer led.
Customers lost confidence when the bank was re-capitalised, not just because private investors would be seeking to profit from the bank, but more because the Co-operative Group would no longer be in control. Democratic member control is one of the hallowed seven principles of the International Co-operative Alliance. Asking your customers what they’d like in an ethical policy isn’t democratic member control. But it’s a step in that direction.
So it’s interesting to see the most recent statement from Co-operatives UK, the guardian in the UK of those hallowed principles, on the use by the bank of the word ‘Co-operative’. The answer, in short is yes: the bank can continue to use the name, but only so long as it exists ‘in order to promote co-operative activity’. The bank, it appears, has agreed.
Having set itself one hard test, the bank has another.
At Save Our Bank we have argued from the start that while the bank is not a co-operative, it can still lead the way on ethics, and given time it could return to co-operative control, this time with real customer influence. What matters is the direction of travel.
By sticking together as an organised group of customers, we can make sure that is the right direction.