James Daley

By James Daley

In spite of the troubles that have engulfed the Co-op Group over the past year, its customers remain happier than those of most other banks, and its trust ratings have remained intact as well. In the four product areas where Fairer Finance rates the Co-op, it has above average scores for both happiness and trust - and in the insurance space, its rankings are at the very top end on both of these measures.

But its record on transparecy gives some insight as to why the Co-op has ended up where it has over the past year. In all four product areas where we rate the Co-op, its transparency scores are average or below average - which is not what you'd expect from a company that is owned by its customers and which stands on a platform of strong ethics.

I think the Co-op Group is still a fantastic company, but over the last 15 years, the management team in its financial services division has often lost sight of the organisation's roots. Division heads have been brought in from other shareholder-owned rivals, and these managers have often deployed the same tactics to bolster the bottom line as they were using over at their former employer. In car insurance, for example, Co-op continues to automatically opt people into paying monthly - for which customers will be charged an eye-watering 23.2% interest. Its terms and conditions documents are often riddled with jargon, and laid out in such a way that is impossible to navigate.

And hiring a chief executive on a package worth almost £7m over two years shows a lack of judgement on the part of the board, especially when you put this sum in the context of the £400m that the company is having to go and ask investors for today.

Still time to turn the corner

These are easy things to fix, and we'll be engaging with the company over the coming weeks to see if we can encourage them to change. I believe that most people in the Co-op are passionate about its mutual status, and its mission to put customers first - but occasionally its left hand doesn't realise what its right hand is up to.

Luckilky for the Co-op, its customer happiness and trust scores have held up. But if the management don't start to ensure that they're living up to the strong ethics which they claim are central to their business, the current crisis could send them into a tailspin. That would be a great shame. The financial services sector needs more mutual companies not less. And one the size of the Co-op needs to be leading the way in the banking revolution.