Co-operative Business Consultants Response to consultation from Co-operatives UK

CBC is active in finding new ways forward for the co-operative movement. We take action as a critical friend and active member of Co-operatives UK. In 2014/2015 we hosted three major conferences and submitted popular proposals to Congress on co-operative identity, a Co-op Fund, living wage, salary ratios and member participation. We rallied over 500 co-operators in support of a petition calling on elected members to reject changes to the governance of The Co-operative Group until they are fully consistent with co-op values & principles.
We welcome the consultations from the FCA and Co-operatives UK.

Co-operative Business Consultants Response to consultation from Co-operatives UK

1. Do you agree the UK government should define a co-operative using the ICA Statement?

2. Do you believe that defining a co-operative in law, perhaps citing the ICA Statement, would be beneficial?


3. Is it right to use the three parts of the Definition for the three parts of the UK Co-operative Test?

No. This would broadly define all co-ops as mutuals (*). It is right to use the first four Co-operative Principles as in the proposal from the FCA – and as previously proposed by Co-operatives UK itself.
CBC is very concerned that Co-operatives UK has substantially changed its position.
From 2012, Co-operatives UK has published guidance on defining co-operatives, “Practical tools for defining co-operative and mutual enterprise”. It statements include:

  • “The internationally agreed co-operative principles are the foundation for our policy on co-operative identity.”
  • “The Co-operative Principles can help us in distinguishing key aspects of co-operative identity . . .”
  • “These V&Ps should always be used as a basis for identification.”

The guidance uses Principle 4 (autonomy and independence) as a pre-requisite for a co-operative, and Principles 1, 2 and 3 as essential features – principles 5, 6, and 7 being aspirations. The point here is that Co-operatives UK uses the ICA’s principles to define co-operatives, rather than the ICA’s definition or values.

Even as recently as November 2014, Co-operative UK’s response to the FCA, states (page 6) “We assert that the FCA policy for identifying a BFC [bona fide co-operative] should be a direct translation of the ICA ‘Statement on the Co-operative Identity’”.
Yet Co-operatives UK now assert (5.3) that “the Principles should never be used as criteria in themselves”, and “The FCA must not be overly prescriptive” regarding democratic member control.

CBC is very concerned by the increasing tendency of Co-operatives UK to dilute the co-operative principles and co-operative identity. What has changed in the last three years?

Co-operatives UK now actively defends the Group’s continued use of the co-operative name by the Group’s former or partly owned subsidiaries, the Co-operative Travel and Co-operative Bank. These are hotly contested decisions where regulation could and should play a valuable role in protecting the co-operative identity.

Co-operatives UK has a conflict of interest in relation to its stewardship of the co-operative identity and its reliance on the Co-operative Group. As stated in its own annual report5 (note 15), 40% of voting rights within Co-operative UK are held by one member society, the Co-operative Group. In addition, the Group appoints over 20% of Directors and provides an undisclosed and substantial proportion of Co-operative UK’s income.
It is almost impossible to see the assertion of “more flexibility” and less regard for the co-operative principles as anything other than an attempt to accommodate The Co-operative Group.

5. Do you agree with our assertions on ownership, and democratic control?
No. These assertions are too broad and vague. They are also not credible, given that Co-operative UK has a conflict of interest, as described above.

6. Do you agree with our assertion that the Values should not be used as criteria in the Co-operative Test?
Yes. We are glad to see agreement on this point between the draft positions of Co-operatives UK and the FCA.

7. Do you agree with our interpretation of the Statement on the subject of the Principles?
No. It completely overturns the previous position adopted by Co-operatives UK, and can only be regarded as self-serving.

8. Do you agree with our interpretation of how the Definition, the Values, and the Principles relate to one another?
No, as question 7 above.

9. Do you agree with our critique of the FCA’s current Co-operative Test?
This question is ambiguous, given that Co-operatives UK published its critique before the FCA’s most recent consultation. It is not clear whether the question refers to the FCA’s consultation published in November 2014, or in June 2015.

10. Do you agree the FCA should focus on specific cases where it has reason to suspect profit or financial returns are overriding a co-operatives’s purpose?

(*) A mutual is defined by the ICA’s Co-operative Monitor (page 3) as “A private co-operative type organisation providing insurance or other welfare-related services.” Co-operatives UK defines a mutual “more in an open sense, which includes member ownership but without requiring democratic form”. In other words, both mutuals and co-operatives are owned by members, but only co-operatives have co-op principles such as democratic member control.

1 thought on “Co-operative Business Consultants Response to consultation from Co-operatives UK

  1. Pingback: Response to FCA June Consultation on Co-op & Bencom Guidelines | Ian Snaith's Website

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