Do mutuals scale?

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Charles Moore (among many) comments:

More attention should be paid to the failure of the Co-op Bank. It suggests that an ‘ethical’ motivation does not guarantee that the interests of the customer will be well served.

This may well be true, indeed the 'ethical' argument was always more of a positioning statement than something inherent to mutual organisation models.

My question is more fundamental given the problems with the Co-op (and the banking disaster has taken attention away from its underperformance as a retailer and aggressive behaviour as an undertaker) - can mutuals scale up to be large national organisations and maintain business effectiveness?

It seems to me that the problem is one of accountability - the leaders of large mutual organisations (especially those that are consumer mutuals rather than worker mutuals) are not as accountable to their members as joint stock companies are to shareholders. The business cannot go to its 'owners' for more cash and those owners either cannot or do not act to replace the management when it fails (such as by arriving cap in hand asking for the money to clear up mistakes).

Cullingworth Conservative Club is a mutual organisation - it works because having about 800 members who live in the village and use the club means that the leadership is accountable. A national mutual - the Co-op or one of the big building societies - has a leadership that isn't subject to this attention or scrutiny, that isn't really accountable. Perhaps here lie some of the problems?

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