The news published in Reuters that the Co-operative Bank has allocated £90 million as a provision relating to the mis-selling of payment protection insurance (PPI), will come as a shock to many Co-operative Group members who indirectly own this bank, which is a subsidiary of the Group.
These PPI insurance policies were typically taken out alongside a personal loan or mortgage to cover repayments if customers became ill or lost jobs but the policies were sold to self-employed or unemployed people who would not have been able to claim and to consumers who did not realise they were taking out a policy.
Whilst the sum of £90million pales into insignificance when compared to the total £8bn, which analysts have estimated as the total of the provisions needed to compensate victims of this the latest ‘rip-off’ perpetrated by Britain’s banks, it becomes even more shocking to discover that co-operatives and mutuals have also been party to such mis-selling (that perhaps more honestly ought to be called fraud). This, when the true purpose of co-operatives and mutual enterprise (CMEs) is not to generate profits but instead to provide benefits secured by market intervention in the best interests of their membership.
I do not know the amount of the Co-operative Bank’s training budget but I guess that it must be sizeable, however, if their managers still think that its OK to rip-off their member-customers then it must have been mostly wasted.
Everyone involved in a co-operative or mutual needs to have, at the very least, a basic understanding of the purpose of their enterprise. And significantly, at all levels of leadership (both member-leaders and executive-leaders) there needs to be unequivocal understanding of not only the true purpose of their organisation, but also a clear perception of the co-operative and mutual enterprise model and of the economic precepts upon which co-operation is based.
What’s the point of being involved with any CME if it fails to deliver on its purpose, especially if it engages in the same marketing ploys and practices as the unprincipled businesses that the co-operative or mutual is supposed to replace?
Although the blame for this fiasco may be placed upon the highly-paid managers of the bank (see details on the link below), the Directors must take ultimate responsibility. It is the job of Directors to direct, that is to direct the organisation towards the achievement of its real purpose and not just to follow their chief executive’s bidding.#
Those who would like to learn more about the co-operative and mutual enterprise model and the economic precepts upon which co-operation is based are referred to an excellent and comprehensive handbook by Edgar Parnell: Co-operation – the beautiful idea, reviewed recently in the Co-operative News.
The printed or eBook version can be sampled or purchased at: http://s.coop/1klb
Edgar’s website: http://s.coop/1kl6