Sustainability Report 2009 - The Co-operative

Diversity Social inclusion Ethical finance Diet and health Animal welfare International development and human rights Community investment Social responsibility
In December 2006, following lobbying by The Co-operative Bank 7 ,
the LINK Network Members Council agreed the introduction of a
new financial inclusion premium, which incentivises ATM operators
to deploy free-to-use cash machines in financially excluded target
communities. The Co-operative Bank currently has 37 ATMs
located in such communities, helping to meet basic banking needs
in these areas. By the end of 2007, charges were removed from
all Co-operative Bank ATMs – either by way of conversion to free
machines, or physical removal of the ATM from the site.
Ethical finance
Banking support for small businesses in deprived areas
CFS’ provision of finance to small businesses in deprived areas
remains significantly above the industry average, despite a small
decline in provision from 2008, in line with an overall decrease
in lending across the industry.
Performance benchmark
Financial support to small businesses 8 in deprived areas 9
as proportion of all equivalent Co-operative Bank activity
Business current
accounts
2006 2007 2008 2009 Industry
average
2009 10
9.1% 8.0% 6.6% 6.6% 4.4%
Overdrafts 9.1% 6.5% 6.5% 5.9% 3.4%
Loans 9.0% 7.0% 6.4% 5.0% 3.5%
Loan and
overdraft
balances
16.2% 5.6% 8.9% 8.1% 3.9%
Support for credit unions
The bank is the largest provider of banking to the credit union
sector, providing facilities to over 60% of the British movement.
Credit unions are financial co-operatives that offer savings and
low-cost loans to members, many of whom are unable or unwilling
to use more traditional services. The bank provided significant
‘behind-the-scenes’ IT development, administration and training
to facilitate the launch of a Credit Union Current Account.
During 2009, the account became operational at a further
seven credit unions, exceeding the 2009 target and bringing the
total number of credit unions offering the account to 24. An average
of 223 individual accounts were opened per week in 2009 (to
November) bringing the total to 25,180 account holders, an increase
of 66% on the previous year-end. The account enables credit union
members to: withdraw cash from their credit union account at any
ATM machine in the LINK network; use direct debits and standing
orders to pay regular household bills; and use a Visa debit card at
Visa locations worldwide. As a development, the Credit Union Current
Account is considered to represent a ‘step change’ in the ability of
credit unions to promote financial inclusion.
Additionally, in 2009, the bank continued to support the
Association of British Credit Unions’ main annual conference
and its newsletter, Credit Union News, through a contribution
of £31,000.
The Co-operative Electrical launched a pilot partnership scheme
with credit unions in October 2009, providing credit union
members with the opportunity to buy online goods via a credit
union loan. The scheme will be rolled out across the UK in 2010.
Basic bank account provision
The Co-operative Bank offers a basic bank account, Cashminder.
Features include: an option to pay bills by direct debit (which can
yield bill reductions); the ability to have pensions and benefits paid
directly into the account; and access to money via a debit card.
Research commissioned by the British Bankers’ Association in
2006 showed that over three-quarters of adults who had opened a
basic bank account felt more confident in dealing with money as a
result 11 . There was a 35% increase, to 182,000 (2008: 135,000),
in the number of Cashminder accounts provided by the bank
between January and November 2009.
Performance benchmark
In 2009, The Co-operative Bank had a 2.4% market share in
provision of basic bank accounts, which slightly exceeds its
current account market share of 2.1% 12 .
Bank accounts for prisoners
Throughout 2009, work continued on a pioneering project that
seeks to enable prisoners to open a basic bank account while in
prison. Following a pilot project at Forest Bank Prison, Salford,
which started in 2006, The Co-operative Bank now accepts
applications from 30 prisons, representing nearly 20% of UK
prisons. The total number of accounts opened since the scheme
began reached 3,633 in November 2009. This represents more
than a two-fold increase since 2008 (1,400), illustrating the
demand for accessible financial services amongst this population.
The provision of a bank account can be a vehicle to facilitate
employment and housing for offenders leaving prison; factors
which are considered key to the reduction of re-offending. Prior to
release, prisoners are offered the opportunity to open an account,
which will be ready for use on release. Research undertaken by
John Moores University in 2009 found that, of a group of over
100 prisoners who opened an account before leaving prison,
only 34% re-offended, nearly a third less than the national average
of 47% 13 .
Child Trust Funds
The Child Trust Fund is a long-term savings and investment
account for children. Until 2010, the Government had made
additional payments to children in lower income families through
this account, to help them build up a lump sum for when they
reach the age of 18. As at December 2009, 107,400 and
40,200 accounts were operating in former Britannia and CFS
respectively. Of all accounts opened since the scheme launched 14 ,
21% and 13% respectively received the additional payments
made to children in lower income families. From 2011, additional
payments will no longer be made to these accounts by
the Government.
Financial education
CFS promotes two financial education schemes, Fit4Finance and
Number Partners. Number Partners is a national volunteering
scheme that brings together business volunteers and primary
schools to improve numeracy skills and achievement. In 2009
over 260 volunteers donated approximately 5,500 hours of their
time to the programme, helping approximately 900 children. The
Fit4Finance scheme was developed to help improve the financial
skills and awareness of secondary school students. Workshops
cover topics such as savings and interest, budgeting, and credit
and debt. The programme supports the Financial Services
Authority’s National Strategy for Financial Capability, which is
48
The Co-operative Group Sustainability Report 2009