New-look CFS ready to take on the banks

The new £70 billion CFS ‘super-mutual’ which became a reality on August 1st following the Britannia Building Society’s merger with Co-operative Financial Services will be accountable to members...

That’s the pledge from new CFS Chief Executive Neville Richardson, who said after the merger had been approved by the Financial Services Authority (FSA) that the move represented the “next step in the renaissance of the co-operative and mutual sector” in the UK.

“Trust has become a scarce commodity in other financial businesses of late,” said Mr Richardson. “But we aim to provide a genuine alternative to those disillusioned with shareholder owned banks.

“Ours will be an ethically-led organisation, which will reward members and be completely accountable to them. Our challenge now is to work hard to deliver the benefits we have promised as soon as possible.”

The former Britannia CEO added: “From day one, we will be founded on the principles of trust and reward and provide the scale and strength to meet the expectations of consumers in today’s uncertain climate.”

And although both CFS and Britannia will retain their independent products and brands during the integration process, Mr Richardson made it clear that it will be a priority for the merged businesses to provide consistency across rates on similar products in an effort to offer best value to customers.

So a mortgage rate cut affecting 15 per cent of Britannia mortgage holders will be passed on to all other Britannia and CFS customers as soon as possible.

Co-operative Financial Services Chair Bob Burlton said the merger created a mutual organisation with “the scale, financial strength and reputation to provide a wide range of ethical products to millions of UK households”.

Added Mr Burlton: “And we are doing this at a time when many people are calling the integrity of their banks into question.”

A statement issued by CFS following the FSA’s decision to approve the merger arrangements said the deal — which was supported by over 88 per cent of Britannia’s shareholding members and by more than 86 per cent of borrower members — will create the UK’s most diverse financial mutual and provide a trusted and ethical alternative to shareholder-owned banks.

“The new organisation will have a robust capital position, excellent liquidity and funding underpinned by strong underlying profits,” said CFS. “It will be strongly capitalised, with a pro forma Tier 1 ratio of 9.2 per cent, loans essentially fully funded by own customer deposits.”

The new business will have more than £70 billion of assets; nine million customers; more than 12,000 employees; more than 300 branches; and 20 corporate banking centres.

All three million Britannia members have already joined or been given the opportunity to join the Co-op Group, where they will continue to earn financial rewards on Britannia products, and will have the opportunity to earn even greater rewards by purchasing products from the Group’s family of businesses.

CFS will now comprise the Co-op Bank — including the Britannia business and internet bank smile — Co-operative Investments and Co-operative Insurance.

The expanded branch network will be core to the new business and plans are already underway to allow customers from Britannia and the Bank to transact in all branches in due course.

Although the merger was approved by a massive majority, the Financial Services Authority has reported that 22 individuals made representations about a number of issues during the consultation process — though none of the complaints were upheld.

An announcement on the FSA’s website — — says that concerns were raised about the use of the word “merger” which a number of representers claimed was misleading for Britannia members.

There were also complaints about the “lack of balance” in the merger document; claims that the votes in April were “unrepresentative” of the Britannia membership and that insufficient notice had been given before building society’s AGM.

One person expressed surprise that Co-operative Group members had not been allowed to vote on the proposals while the FSA says that a number of representers objected to the fact that the merger document did not disclose the support given by the Co-operative Group to the Labour Party.

However the FSA’s Anna Simmons says in her summing up in the approval document that it had been confirmed that neither the Bank or CFS make any donations or provide any support to any political party.

The FSA’s conclusions say that donations made by the Co-op Group to the Co-operative and Labour Parties amount to just over 0.3 per cent of the Group’s profit before payments to and on behalf of members.

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