James Daley

By James Daley

The Co-op group's mismanagement and financial woes have been well documented over the past few months. Indeed, barely a day seems to go by without yet more bad news emerging about the organisation.

The irresistible temptation for commentators at times like these is to endlessly speculate about when the bank will go bust. And of course, the more speculation, the greater the chance that it actually happens.

I've done my best to encourage Co-op customers to hold their nerve. While these are tough times for the group, the high likelihood is that the Co-op will emerge the other side of all this as a better, stronger business - which more faithfully lives up to the values that its organisation was founded upon 170 years ago.

But if staying loyal to the Co-op feels like sitting on the Bridge of the Titanic, then why not consider what the worst case scenario could be.

The worst case scenario

As long as you've got less than £85,000 in savings with the Co-op, then your money is protected. So if the Co-op went bust, you wouldn't lose a penny of your savings - and furthermore, you'd have them paid back to you by the Financial Services Compensation Scheme in less than seven working days.

If your money is in a Co-op current account, the same rules apply - but naturally, you might be concerned about whether or not your bills would get paid if your bank suddenly went out of business. No money for seven working days would leave a lot of people in trouble.

The truth is, there's no precedent in the UK for this kind of banking collapse. But if the Co-op were to declare itself bust, it would be a controlled process, managed via the Bank of England. Before the announcement was even made, it's likely that plans would be put in place for all of the Co-op's current account business to be sold off to a competitor. And in all probability there would be no disruption in service whatsoever.

The bottom line is that the Co-op going bust wouldn't be nearly as big a deal as it would have been before the financial crisis. Since then, a lot of thought has gone into what should happen if a bank goes to the wall, and the likely outcome is that customers would experience very little inconvenience.

So my advice remains to stay put. If you're looking for a bank with an ethical bent, there really is no major alternative when it comes to day to day banking. And for all it's failings over the past few years, the Co-op remains a fantastic company with a great heritage - which I'm sure it will do justice to once again in the years to come. By kicking it while it's down, and moving your money in a panic, you'll only make it harder for it to get back on its feet.

It remains a bronze-rated Fairer Finance bank account provider - and while there are many more solvent banks that you could choose to put your business with, there are not many that can offer what the Co-op does.