Co-operative movement

Commentary

Context CIS and The Co-operative Bank are part of the Co-operative Group family of businesses - the largest consumer co-operative in the UK. Both CIS and the bank aim to serve the wider Co-operative movement through the provision of products and services and in-kind support. Both CIS and the bank have reported on the way they deliver value to the Co-operative movement for a number of years. During 2003, CIS and the bank worked with the Co-operative Group to offer new or enhanced products to customers - most significantly, a Co-operative Group Members' Saving Account and the Travel Visa credit card.i In addition, during 2003, CIS and the bank engaged in product development and enhancement in respect of the wider Co-operative movement, as described below.

Retailer Financial Services A Retailer Financial Services (RFS) Steering Group was established in July 1998 which aims to identify opportunities for the distribution of financial services to retail customers across the UK Co-operative movement. As part of the RFS project, 559 cash machines were installed in Co-op stores in 2003, taking the total number installed since the RFS project began to 1,595. As the majority of Co-op convenience stores tend to be located in outlying areas, the programme contributes to the bank's efforts to promote financial inclusion. Follow this link for details of how CFS seeks to promote social inclusion. Profits generated by the cash machines are shared between the bank and 24 participating retail societies. The bank is presently assessing the results of a pilot initiative, undertaken in 2003 with four co-operative retail societies, which has introduced 57 charging cash machines. The machines are located at sites where cash machines would not ordinarily be considered, due to the low expected levels of usage. In the majority of cases, the charges are lower than convenience-charging cash machines provided by competitors.

Dividend During 2003, CIS and the bank continued to work towards the development of the Co-operative Group's 'Dividend' project, which will see the return of a dividend payment to all consumer members of the Group. From 2005, a dividend payment will be made to each consumer member, based upon the amount of money they spend with the Group's consumer-facing businesses during the course of the year. In advance of this, a flat rate dividend of approximately £10 will be paid to all consumer members of the Group in late 2004. As consumer-facing businesses, CIS and the bank will continue to be key participants in the scheme moving forward.

Co-operatives Directplus The bank has developed a fee-free banking package for co-operatives, which is due for launch in May 2004. 'Co-operatives Directplus' has been developed in partnership with Co-operativesUK - a member-based organisation for co-operative enterprises ii - and is based on the bank's recently-launched Community Directplus account. Follow this link for details of Community Directplus. Key features of the account include: free banking, credit interest on balances above £2,000 and an annual donation to Co-operative Action.iii Additionally, the account offers Co-operativesUK members discounted arrangement fees and flexible repayment facilities for business loans. In support of the launch of Co-operatives Directplus, appropriate customer service staff will be provided with staff guides to develop their understanding of the banking needs and history of co-operatives. Upon registering with Co-operativesUK, all new co-operatives will be sent details of the Co-operatives Directplus package.

Co-operative Funeralcare Pre-Payment Plan iv In April 2003, CIS joined with Co-operative funeral providers to offer through Financial Advisers the Co-operative Funeralcare Pre-Payment Plan. Working with Co-operative Funeralcare and, through them, with 21 other Co-operative funeral partners, the offer includes a range of options, designed for customers wishing to make detailed plans for their funerals.

Affinity partnerships Both CIS and smile entered into affinity partnerships with United Co-operatives during 2003 to promote products to its members. CIS and smile make a contribution to United Co-operatives for every product taken out by one of its members. CIS entered into similar affinity partnerships with Midlands Co-op and Lincoln Co-op during 2003.

Co-operative Ventures In 2003, the bank continued to play an active role, via its Head of Co-operative and Sector Development, in the Co-operativesUK New Ventures Panel, which seeks to identify new areas for co-operative endeavour. A number of workstreams have been identified for further development, including social care, childcare, green energy, long term finance for co-operatives and student housing co-operatives, with the latter two workstreams being led by the bank.

Credit Unions CFS continues to support the UK credit union movement. Working with the Association of British Credit Unions (ABCUL),v the bank has extended the successful PayPoint payment card pilot to enable credit union members to make cash payments at Post Office counters throughout the UK. This enables members to access their credit union accounts via thousands of outlets. CFS continues to sponsor ABCUL's annual national conference and the publication of its regular newsletter, Credit Union News. Over 2,000 members of staff (and their families) of the Co-operative Group, CFS, Co-operativesUK and ABCUL are members of the staff-run Co-operative Family Credit Union, which is supported with staff seconded from CFS. The credit union has lent out over £3.5 million since its launch in 1998.

Economic support In 2003, CIS maintained the dividend on Co-operative society business at the same rate as in previous years, resulting in a distribution of £3.3 million to the societies that trade with CIS. Via Corporate and Business Banking, the bank provided some £135 million of assets (e.g., loans and overdrafts) to co-operatives and mutuals during 2003. Follow this link for details of the bank's lending to co-operatives. CIS' and the bank's support for co-operative enterprises through their community giving amounted to 6% and 5% respectively in 2003 (2002: 30% and 23%). Follow this link for details of CFS' support for co-operatives through community giving. These figures are more in line with the percentage of overall community giving made to co-operatives in the years prior to 2002, when a payment of £1 million to Co-operative Action significantly increased CFS' contribution to co-operatives. In 2003, the majority of CFS' direct economic support for co-operatives was provided to the International Co-operative Alliance - an independent, non-governmental association serving the worldwide Co-operative movement, which seeks to build strong, viable co-operatives in developing countries - and the Association of British Credit Unions Limited (ABCUL) (see above).

Upstarts Awards In 2003, the bank and Co-operative Action agreed to sponsor the third annual Upstarts Awards, hosted by New Statesman magazine. The awards celebrate the achievements of the UK's growing number of businesses that aim to advance social, as well as economic, goals. Six awards were presented at a London ceremony in February 2004, with a total of £20,000 worth of prizes shared amongst the award winners.

Co-operative Action Co-operative Action was established in April 2002.iii Through the provision of grants and loans, it seeks to encourage communities to develop co-operative, mutual or social enterprise solutions to the challenges they face. CFS provided considerable financial support (£1 million) to Co-operative Action in 2002 and CFS staff continued to play an active role in the management of the organisation during 2003. A total of almost £1 million of finance was provided to 43 co-operative projects around the UK during 2003.

Staff involvement In addition to the above, CIS and bank staff are involved in a number of other strategic initiatives within the Co-operative movement. These include: a review of corporate governance being undertaken by Co-operativesUK and the involvement of senior members of staff on the boards of the Association of European Co-operative and Mutual Insurers (ACME), the International Co-operative and Mutual Insurance Federation's Insurance Intelligence Network,vi the European Association of Co-operative Banks (EACB)vii and the Association of British Credit Unions' (ABCUL) board.v

i www.co-operativebank.co.uk/personal/visa_travel.html
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ii www.cooperatives-uk.coop
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iii www.co-operativeaction.coop
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iv www.cis.co.uk/pdf/mkt_440.pdf
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v www.abcul.org
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vi www.icmif.org
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vii www.gebc.org
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