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Financial stewardship

Financial controls: Significant emphasis is placed on robust financial controls. A new role of Head of Compliance and Risk was created to further strengthen these procedures, and our internal controls are regularly reviewed, updated and audited. This year’s audits again raised no concerns.

Procurement: We also follow a documented approach to procurement. This ensures that, as far as possible and practical, we source products and services that are fair trade, environmentally friendly, and/or locally produced. 

Lending: Our lending decisions are made within the parameters of credit policies, which help in managing our exposure to risk. Prudential lending limits specify the proportion of our Share Capital, which can be lent by commodity, country risk category, region and product.   

Liquidity and investment: We lend funds to our customers in GBP, USD and EUR. At the beginning of the financial year (October 2020), we again, temporarily converted part of our Share Capital (about £30m) into EUR and USD at a fixed rate using foreign exchange (FX) swaps reversing at the year-end. This process allowed us to fix an element of our lending costs, providing a saving compared to using larger currency overdrafts. The rest of our lending was facilitated by foreign currency overdrafts, secured against the remaining deposited Share Capital deposited at our main bank Santander UK plc.  

Ratios: In addition to the Share Capital of Shared Interest Society members, we manage donations made to Shared Interest Foundation. In order to do this efficiently and effectively, we monitor two key ratios. Management costs as a percentage of charitable expenditure were this year 24% (2020: 38%) and fundraising costs as a percentage of income were 3% (2020 3.6%). The total amount of support costs remained the same as the previous year but the Covid-19 pandemic delayed the commencement or progress of some projects and overall charitable spending was consequently reduced.  

You can read the full Social Accounts document here.

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