A Truly Mutual Bank? Legal Problems and Radical Ideas

I just had this correspondence with Robin Brownsell of Bank to the Future – a crowd funding site.

I found information about Robin and his site in the excellent book “The Heretic’s Guide to Global Finance” by Brett Scott @suitpossum . I highly recommend Brett’s book alongside “Anarchists in the Boardroom” by Liam Barrington Bush @morelikepeople, an anarchist activist, for a refreshingly radical view on these matters. Both books combine high ideals with practical on the ground suggestions for beginning a process of change. They also need to be complemented with political and legal action to get anywhere but the law should facilitate that.

Robin tells me that Res Rublica is launching a Report next week in Portcullis House which is relevant to this question. The correspondence gives links to the New Economics Foundation and Mutuo materials on this as well as some of the legal sources and issues.

“From: Ian Snaith
Date: 2 February 2014 10:23
Subject: Re: Starting Banks
To: Robin Brownsell

……………….My key, if rather geekish point is that it is currently impossible to use an industrial and provident society ( to be renamed co-operative and community benefit society from 1st August 2014) which has withdrawable share capital for a banking business unless it is a credit union – see s 7 IPSA 1965

That does not change in the Consolidation Bill currently before parliament – see clauses 67 to 70.

However, Lord Naseby’s Bill would greatly ease this situation if passed as it would allow societies use of redeemable shares without that restriction. I understand it will have quite a high priority in the Commons but I believe HMT have not yet decided whether or not to support it and, as a private member’s Bill, it is doomed without Government support.

Of course we already have building societies and credit unions using member share capital and any organisation meeting the FSMA et al definitions of deposit taking would be subject to PRA regulation. One possible route would be to build on the basis of existing credit unions or even building societies and the inability to use the co-operative or community benefit society structure is something of an obstacle to that. Clearly avoiding or living with PRA Rules is likely to be an even bigger obstacle.

As you are no doubt aware, the New Economics Foundation are also looking at these issues and I have spoken to one of their researchers who suggested that there is some political good will towards removing the ban on banking for registered co-ops. Mutuo promoted the Naseby Bill and published a pamphlet in support of it.

Hope this is of interest and some use.

Best Wishes


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