Martin WheatlyFinancial Conduct Authority25 The North ColonnadeCanary WharfLondonE14 5HS

Dear Mr Wheatly,

We are writing with regard to the concerning and rapidly developing situation for energy co-operatives and their relationship with the Financial Conduct Authority. We have recently heard from  a number of parties who are concerned that the FCA’s recent actions may serve as an effective block on the future development of energy cooperative projects, a model which has proved hugely productive and has much to contribute to both the UK’s decarbonisation process and involving communities in energy production, efficiency and conservation.

We understand that on Friday 11th July 2014 a meeting was held between members of the FCA’s mutuals team and Energy4all, among others. At that meeting, the FCA representative stated that the most common model for an energy cooperative was no longer deemed to be compliant with the FCA’s codes. This would prevent the FCA from registering any further mutuals of this kind, but would also eventually impede upon existing projects.

It is clear that the FCA has a duty to uphold the principles of fair financial conduct and to prevent any abuse of the mutuals system. However, we are deeply concerned that the manner in which the FCA has intervened in this instance puts at risk the future of cooperative energy in the UK.

There has been no major change to the framework governing mutuals since the (Mutual Societies) Order 2013. So it is difficult to understand the timing of this action from the FCA and the apparently sudden change of stance.

We understand that there has been some ambiguity about the meaning of the word “participation” in ascertaining whether a project is a bona fide cooperative. Participation is clearly more than just a narrow question about whether the product of the cooperative is traded solely with members. They may be other forms of participation that the FCA has not considered. So long as this question remains open, we do not believe that the FCA can reasonably move to block future cooperative energy projects.

There has also been some suggestion that the recent actions of the FCA reflect a desire to clamp down on potentially misleading share offer and investor prospectus documents. If this is the case, we would strongly suggest that other, more proportionate measures should be considered rather than moving to prohibit a whole model of cooperative investment.

The transition to a decarbonised economy is also an opportunity to devolve aspects of our power supply, empowering communities who want to generate their own clean energy. We ask that you urgently review the recent change of stance of the FCA, and reconsider ways to ensure financial probity whilst retaining the very positive contribution energy co-operatives are making across the UK where they are already established.

We look forward to receiving a prompt response.

Yours sincerely

Tom Greatrex Mark Lazarowicz Claudia Beamish

Labour Shadow Energy Minister

MP for Rutherglen and Hamilton West

MP for Edinburgh North and Leith

MSP for South of Scotland