A Lessons Learned Review of the Credit Union Expansion Project Produced on behalf of the ABCUL Board in response to a members’ motion to the 2018 ABCUL AGM February 2019 CONTENTS 1. Preface 3 2. Executive Summary 5 3. Introduction & background 20 4. Responses to survey feedback 39 5. Responses to survey questions 66 6. Summary of interview feedback 77 7. Contribution from independent review committee member – Antony Elliott 84 8. Contribution from independent review committee member – Gary Cuddy 85 9. Conclusions & Lessons Learned 87 Appendices i. Financial disclosures 93 ii. Project timeline 96 iii. Full interview summary 99 iv. List of participating credit unions 140 Acknowledgements The ABCUL board and review subcommittee would like to thank those that have contributed time and input to the review process for their support for this important process. This includes those credit unions that submitted feedback to the initial survey, the 14 interviewees and those that provided feedback and advice throughout. 2 1. Preface from the ABCUL board At the Annual General Meeting of the Association in March 2018, the ABCUL membership voted in favour of the following motion: Be it resolved that ABCUL exercise its power of control and oversight over Cornerstone Mutual Services Ltd to understand the reasons for the problems in the management of the CUEP project and ensure that lessons are learned for future working and further reputational risk is avoided. Following this exercise of powers that ABCUL review the current governance structures and revise them if they do not allow transparency and oversight by the ABCUL Board of Cornerstone strategy and operational effectiveness. That the results of these investigations are reported back to the membership. The report that follows represents the board’s attempt at fulfilment of this motion. We sincerely hope that the report will demonstrate that ABCUL is committed to being held accountable for the Project’s disappointing outcome and to learn the lessons from this painful episode in our shared history. In opening the report, the Board would like to take this opportunity to apologise unreservedly for the disappointing outcome of the Project. The Project began with high hopes for the impact it would have in terms of modernising and digitalising the services of participant credit unions with a view to bolstering their sustainability and providing a robust platform for future growth and development. In this goal, the Project fell well short of its aims despite a substantial injection of investment from government and significant effort and commitment on behalf of participant credit unions. Everyone at ABCUL recognises and acknowledges the disappointment and frustration that participant credit unions experienced as a result of the outcome of the Project and accepts responsibility for this. That is not to say that only ABCUL and its subsidiary Cornerstone were at fault within the Project, but to the extent that we are responsible, we are sorry. As the report will elaborate in detail below, the ABCUL board delegated the operational delivery of the Project to Cornerstone Mutual Services. Our apology does not suggest otherwise. But equally we recognise that it was ABCUL’s strategic vision which gave birth to the Project at its outset and contracted with DWP to deliver it. In conducting this review, the ABCUL board considered a number of models. We recognise that there will be some among the membership that would have liked a full, independent inquiry. On balance, however, it was decided that the board should own the process of review and limit the scope of the review to a high-level overview of the key issues within the Project. The board delegated the review’s delivery to a committee of its own number with support in a secretariat capacity from the ABCUL staff. This was bolstered by independent membership of the committee, providing insight and challenge to the process. We believe that this approach best reflects the balance of interests among our members – those that participated, and those that did not – and delivers on the substance of the motion. We appreciate that a report of this nature is unlikely to satisfy everyone, but we hope that what follows will be seen for what it is – an honest and transparent attempt to learn the lessons of the Project and provide closure. 3 The Project did not deliver on its promise but the challenge of relevance for credit unions has only deepened. To tackle this successfully, credit unions and ABCUL will need to continue to collaborate. We hope that this report goes some way to healing the wounds left by the Project and provides us with a platform to move forward, together. Karen Bennett Robert Kelly ABCUL President ABCUL Chief Executive 4 2. Executive Summary The Credit Union Expansion Project review was instigated by a motion to the ABCUL Annual General Meeting in March 2018 which was supported by a majority of assembled members. The motion read as follows: Be it resolved that ABCUL exercise its power of control and oversight over Cornerstone Mutual Services Ltd to understand the reasons for the problems in the management of the CUEP project and ensure that lessons are learned for future working and further reputational risk is avoided. Following this exercise of powers that ABCUL review the current governance structures and revise them if they do not allow transparency and oversight by the ABCUL Board of Cornerstone strategy and operational effectiveness. That the results of these investigations are reported back to the membership. The motion came in the light of the Credit Union Expansion Project (hereafter the Project) closing without achieving its objectives in February 2018. It can be broken into two distinct requests of the ABCUL board: 1. Review the Project’s outcome and establish lessons learned for future working 2. Review current governance structures in relation to transparency and oversight of Cornerstone in relation to the ABCUL parent. The review takes these questions in reverse order and deals first with the governance structures of the ABCUL Group as they related to the Project and its outcome. It then engages in detailed review to produce lessons learned. Review structure and approach In responding to the motion, the ABCUL board considered a range of options and decided that the most effective and reasonable approach would be for it to conduct the review on its own behalf, with support from the ABCUL Group staff team and challenge from independent members of a committee established for the purpose of conducting the review. The committee overseeing the review was as follows: - Andrew Wright, Chief Executive 1st Class Credit Union & ABCUL Director for Scotland (Committee Chair) - Karen Bennett, Chief Executive of Enterprise Credit Union, ABCUL Director for North West and ABCUL President - Grenville Bingham, Director London Community Credit Union & ABCUL Director for London & South East - Rosemary Britten, Director, Wyvern Credit Union & ABCUL Director for the West Midlands & South West - Carol Strand, ABCUL Group Financial Controller & Executive Director, Cornerstone Mutual Services - Antony Elliott, Founder, Fairbanking Foundation (Independent Member) - Gary Cuddy, Director, Kizmit Solutions (Independent Member) Secretariat: - Robert Kelly, Chief Executive, ABCUL - Matt Bland, Head of Policy & Communications, ABCUL - Abbie Shelton, Associate, ABCUL 5 Independent members, Antony Elliott & Gary Cuddy were selected as they each bring a unique perspective to the process: - Antony, as founder and former Chief Executive of the Fairbanking Foundation, has a strong knowledge of retail banking financial services from his long career in the banking industry and, more recently, as leader of the Foundation in its aim to encourage banks and other financial services companies to adopt products, services and practices which support financial wellbeing. In doing so he has worked closely with credit unions in accrediting their loan services and did provide some limited, unpaid advisory services to the Credit Union Expansion Project in its early phases. - Gary, as Director of IT consultancy Kizmit Solutions, and formerly having worked extensively in the banking and retail sectors in IT transformation projects has extensive experience of the technical project management challenges of delivery in complex technical projects of a similar nature to the Credit Union Expansion Project. Each of the independent members of the committee provides a section below on their reflections on the Project’s outcome and the review process. Constraints and limitations of the review Within this review process we wish to be as open and transparent as possible. However, we are nevertheless constrained by certain legal and practical barriers to full disclosure. Firstly, we are bound by certain confidentiality requirements in relation to the main sponsor of the Project – the Department for Work & Pensions – and the main supplier to the Project – Fiserv. As such, in places we will only be able to allude indirectly to the role played by these key third parties in some of the key failings of the Project and its ultimate outcome. We hope that this will be clear throughout. Secondly, we are constrained by available time and resource in terms of the nature of the review process. While we seek to be as open and transparent as possible, we have not had the available resources to conduct a thorough trawl through the many thousands of documents and governance papers that relate to the Project. This would be a huge task and we believe that it is possible to identify and explain the key lessons coming out of the Project without such a detailed process. Finally, we are limited by the still-live nature of the Project in terms of credit unions that remain on the Agiliti-powered Model Credit Union platform developed under the Project. Cornerstone Mutual Services is working hard to provide a clear path to resolving the uncertainty that the closure of the Project created for these credit unions but it would be inappropriate for this review to look into these matters too closely.