Newsletter 21 May 2022

Welcome to this newsletter from the Customer Union for Ethical Banking, the independent union for customers of The Co-operative Bank.

We're a little late with this month’s newsletter because of holidays. In it we have: responses from the bank to our questions on its Sustainability Report; the bank’s most recent results; and news on an intervention from MPs over the Co-op Bank’s “mortgage prisoners”.
 

The bank’s answers to our questions

In our last newsletter in March, we reviewed the Co-op Bank’s latest Sustainability Report. As part of this, we put four questions to the bank on areas we thought needed further explanation: on its waste targets; progress towards measuring Scope 3 emissions; falling lending for renewables; and declines for businesses that breached the bank’s animal welfare policies. The bank has now responded with answers to these questions, and we’ve added these responses to our review of the report here.

On the bank’s lending for renewables, we’re pleased to learn in the bank’s response that it has developed a new framework for green and social bonds. The bank has also told us that it successfully completed its first green bond issue, raising £250 million in capital to support positive-impact sectors, including renewable energy and energy efficiency.

Also on climate, the bank’s response tells us it is now working with a “leading sustainability consultancy” to set credible science-based targets for cutting its financed emissions, to achieve net zero as quickly as possible. We’ve been critical that the bank has been slower than others on addressing its financed emissions (and that its reporting has seemingly tried to blame this on the lack of available reporting frameworks, when there are now several of these in place). So it’s good to see concrete signs of progress on this front.

Thank you to the bank for its responses to our questions. The fact that we’re able to research these issues and get answers from the bank is down to the support of our members and the constructive (and sometimes critical ) relationship we’ve built with the bank under our Recognition Agreement. Do join the union to help make sure we can continue to keep the bank on its toes in this way.
 

Fifth quarter of profits for the bank

The Co-op reported its quarterly results this month, showing a fifth quarter of profits. This follows the bank reporting its first year of profit in a decade, in November. City AM reports that pre-tax profits increased “four times over, in jumping to heights of £30.5m for the three months ending on 31 March, compared to profits of £7.2m for the same period last year.”

MPs call for end to repossession threats to “mortgage prisoners”

Back in February, FT Adviser reported that the Co-op Bank had been accused by a group of MPs of treating a group of mortgage customers unfairly by hiking interest rates and threatening repossession. The affected people are customers of Mortgage Agency Services Number Five Limited (MAS5), a subsidiary of the Co-op Bank, and are described as “mortgage prisoners” as their terms and conditions prevent them from switching to another provider. The customers were subject to a rate hike from 2.99 per cent to 5.75 per cent between June 2009 and May 2012. A campaign web page has been set up – mas5.co.uk – with resources to help people claim compensation.

The letter from the All-Party Parliamentary Group (APPG) on Mortgage Prisoners, available here, says: “We have also received very disturbing reports of how MAS5 and the Co-operative Bank are treating vulnerable customers. […] Instead of supporting one of your customers who has given years of service to the NHS, you are threatening to repossess his home.” The APPG called on the bank to immediately halt threats of repossession to MAS5 customers paying the standard variable rate, and to cut these rates by 2.76% “to reflect the impact of the unfair interest rate increases”.

This is deeply concerning for us at the Customer Union, and we have raised the issue with the bank. It has told us it has responded to the letter by asking to meet with the APPG, and said it will provide us with a statement shortly. If you have been affected, or know others who have, we’d be interested to hear from you.

Thanks for reading and supporting the Customer Union,

With best wishes,

The Save Our Bank team

Have you joined the Customer Union yet? It costs £15 a year to be a member of the first ever customer union co-operative, and help us ensure the Co-op Bank sticks to its principles. It only takes a few moments to sign up here.