Welcome to this July newsletter from the Customer Union for Ethical Banking, the independent union for customers of The Co-operative Bank and Coventry Building Society. This month we report back from Co-op Congress, and discuss the bank’s response on mortgage prisoners.
Report back from Co-op Congress
On 4 July, Co-op Congress — the annual gathering of the UK co-operative movement — was held at Rochdale Town Hall. It's a venerable institution - the first Congress took place in Manchester in 1869. This year’s event, like last year’s, was sponsored by the Co-operative Bank. Speakers included Steve Coogan, Grace Blakeley, and Cory Doctorow, as well as Steve Hughes, Chief Executive of Coventry Building Society.
Given that the second aim of the Customer Union is now “to help get the Co-operative Bank and Coventry Building Society to engage fully in the co-operative sector” - Steve Hughes' words were encouraging and worth noting here.
He began by saying how he believed that the recent merger “not only secured the future of the Society and the Bank”, but also meant that “together we can do more, not less, to build a more sustainable society”. He talked about their pride in sponsoring not only the Congress but also the National Youth Summit, and said “we will continue to champion mutual and co-operative values in action”.
He closed by saying “We strongly believe that mutual business models provide a credible and ethical alternative for personal and business customers in the UK. But we need to shout louder about it. ….This year must be a turning point. With the Co-op Bank by our side, we must work together to give [co-operative business models] more prominence in our economy - whether in housing, health, energy or finance. Because when people have a say in the institutions that serve them, the institutions are better and fairer.”
You can see a video of the whole of Steve’s speech here (Youtube) – and indeed recordings of the whole two days of congress are available on the Co-ops UK website.
Mas5 sold, but customers remain mortgage prisoners
FTAdviser reported in early June that the Co-operative Bank is transferring its ”Mortgage Agency Services Number 5” (MAS5) mortgage portfolio to Topaz. The portfolio includes “mortgage prisoners” – people with a mortgage they are unable to transfer to another provider to get a better deal, even if they are up to date with their payments. They typically had a mortgage with a provider that collapsed during the 2008 financial crisis.
MAS5 is a former Britannia Building Society subsidiary that became a Bank subsidiary after the ill-fated merger between the two organisations in 2009. The company these customers will move to, Topaz, is owned by Computershare, an Australian financial services administrator. The problem with this is that Topaz, like Mas5, is an inactive lender, meaning the customers will remain mortgage prisoners.
The UK Mortgage Prisoners Group are unhappy at this outcome. As FTAdviser reports, they had hoped “the Coventry deal would result in the new owners offering an opportunity for mortgage prisoners to return to the active market.” They want to know what the Financial Conduct Authority would think about whether this constitutes fair treatment.
“Why were they not included in the merger, which would have released 1000s of homeowners from the mortgage prison they have been trapped in for over a decade, giving them the hope of being back in the active market where they originally chose their mortgage from?”, asks the group. The bank declined to give an answer to the FT.
Bank already compensated people, but they remain stuck
In February, it was reported that Lib Dem peer Lord Sharkey had written to the Serious Fraud Office (SFO) asking it to investigate the treatment of mortgage prisoners by MAS5. Previously the Co-op Bank was told in November 2023 by the Financial Ombudsman Service (FOS) to pay redress to mortgage customers who were affected. It eventually acted in line with the ruling, but only after losing an appeal. The bank told us earlier this year that apart from a small number of people they have been unable to contact, the remediation programme is complete.
This is positive, but it doesn’t change these customers’ status as mortgage prisoners. We don’t understand why it wasn’t possible for the merged Co-op Bank and Coventry Building Society to take these people on as customers, as the Mortgage Prisoner Group had hoped. We’re sure that there must be an explanation, and would like to know more from the bank.
We shared this report with the bank and they declined to comment.
Save Our Bank = Customer Union
With the Co-operative Bank back in mutual ownership we've retired the Save Our Bank name - in use since we started the campaign in 2013.
Our website is now at: https://customerunion.coop
You can email us at: [email protected]
(The old email and website addresses still work).
On Bluesky? Follow us there!
Since Elon Musk has ruined Twitter, we’ve switched over to Bluesky. If you have an account, come follow us! Even better, why not share your thoughts on this newsletter there and tag us.
That’s all for this month’s newsletter; thank you as ever for reading and supporting the Union.
With best wishes,
The Customer Union 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. We also welcome Coventry Building Society members. It only takes a few moments to sign up here.
