Closed co-ops in 2014: Deregistrations down 40% on 2013, says regulator

The number of co-operatives deregistered by the Financial Conduct Authority (FCA) in 2014 has decreased by 40% compared to figures for 2013. The FCA reports that 185 co-operative...

The number of co-operatives deregistered by the Financial Conduct Authority (FCA) in 2014 has decreased by 40% compared to figures for 2013.

The FCA reports that 185 co-operative and community benefit societies were removed from the register in 2014 (as of 25 November). Of these, 19 converted to company status, while 12 registrations were cancelled at the FCA’s volition.

Some 69 registrations were cancelled at the society’s own request, while 85 were cancelled following the dissolution of a society or transfers.

In 2013, 317 societies were removed from the register: 14 due to conversions, 109 at the FCA’s volition, 81 at the society’s own request and 113 following dissolution or transfers.

The FCA said: “The difference in the figure of cancellations on our volition is due to an exercise carried out in 2013 to cancel the registration of those societies who had not submitted annual returns. A further round of cancellations is likely to follow in 2015 for those societies who have, after notice by us, failed to submit annual returns.”

Since April 2014, the Industrial and Provident Societies and Credit Unions (Arrangements, Reconstructions and Administration) Order 2014 has empowered the FCA to use company voluntary arrangements and administration for industrial and provident societies, as it can for companies. It has yet to use this power to put a co-operative into administration.

The FCA did not suspend any co-operative organisations in 2013 or in 2014.


Energy Saving Co-op goes into liquidation

The Energy Saving Co-operative ceased trading in January 2014 following an unsuccessful attempt to raise additional capital, leaving shareholders and supportive co-ops to shoulder its debts.

At a general meeting in February, the society resolved to wind up voluntarily and appointed MHA MacIntyre Hudson as liquidators. It employed 12 people, who worked with contractors to deliver energy- saving measures to homes.

The co-op formed in 2011, drawing almost £1m in investments. Midlands Co-operative invested £500,000 and Midcounties Co-op invested around £50,000. The Phone Co-op and CDS Co-operatives were also investors.

The US-based National Co-operative Grocers Association invested $100,000, with the intention of replicating the idea. Building owners, tenants, co-ops, community groups, suppliers and tradespeople also took shares in the business. Individual investments totalled £330,000.

Chief executive Ewan Jones said the difficulties arose from being a start-up business, but added that the scaling back of the government’s green initiatives created further challenges for the venture.

He said: “The Energy Saving Co-operative has been adversely affected by this government’s retreat from its aspiration to be ‘the greenest government ever’. In particular, the poor design and implementation of the Green Deal, and allowing the Big Six energy suppliers to constrict delivery of the Energy Company Obligation, did not help to build momentum for a sustainable energy-saving market.”

Ed Mayo, secretary general of Co-operatives UK, said the Energy Saving Co-op had struggled to gain traction in a competitive sector under significant policy changes.


Community shops close their doors

Two community-owned shops ceased trading this year; Temple Guiting in Gloucestershire and Cwm Trannon in Powys.

A further three were removed from the register of co-ops; Leafield Community Shop in Witney, Oxfordshire, which was taken back into private ownership in 2013, the Hungry Snail in Wakefield, West Yorkshire, and Weston Community Shop in Staffordshire.

There are now 320 community-owned shops in the UK, all of which are co-operative businesses, including 28 registered societies. The sector grew 4% from last year.

James Alcock, head of front line at the Plunkett Foundation, said the sector remains robust. “Community ownership represents an achievable solution for rural communities facing commercial shop closures,” he added. “Very few community shops cease trading; in 25 years only 16 have ever closed, giving the model a long-term survival rate of 95%.

“Their success is due to their adoption of robust structures promoting genuine community ownership and democratic control, and the fact that they’re responding to a very real need within the community.”

Glass half full for Cornish pub bencom

A Cornish community benefit society was deregistered after it failed to buy a local pub, but its ideas are being put into practice.

"It’s looking positive. We didn’t want to see the place close"
“It’s looking positive. We didn’t want to see the place close”

The FCA removed Polbathic Community Pub from the register of co-operatives on 13 May.

The bencom had raised £90,000 in community shares but it needed more to buy the Halfway House in Torpoint, which was eventually snapped up by the owner of a nearby pub.

“We didn’t have all that much time to organise things,” said Anthony Lawson of the steering committee. “We’re not depressed about it because the chap who bought it is doing a lot of the things we wanted to do with it.”

He added: “Our idea was to refurbish some of the rooms and let them out to local people to generate a steady income every month, and that’s what he’s doing. There’s a high demand for rental properties, we don’t have that many houses here.

“He’s also having a library. It’s looking positive. We didn’t want to see the place close.”


Co-op social clubs hit by multiple pressures

The FCA cancelled the registration of more than a dozen co-operative social clubs in 2014.

Ken Green, general secretary of the Club and Institute Union (CIU), says factors behind the dwindling number of clubs include culture change, decreased footfall, mismanagement, the increasing cost of entertainment and pressure from developers for housing sites.

“Clubs need to adapt to the modern era,” he says. “A lot of them aren’t managed in a professional way but with good management and education every one of them will survive. That’s what we’re trying to promote, with Co-operatives UK.” 

The CIU rejoined Co-operatives UK this November as a federal member.

Co-ops deregistered this year include Royal British Legion clubs in Southsea near Portsmouth, Lutterworth and Oakham, both in Leicestershire, Spalding in Lincolnshire and Smethwick in the West Midlands. Loanhean
Ex-Serviceman’s Club in Midlothian was also a casualty, along with working men’s and social clubs in West Glamorgan, London, Wiltshire, West Yorkshire and South Yorkshire. In Abertillery, Gwent, two clubs within a mile of each other were removed from the register.

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