Affinity under threat from split

The mutual benefits to be gained from affinity cards cannot be doubted. Some 30m so far generated for good causes such as Oxfam, the RSPCA and NSPCC is eloquent testimony of what the cards can do for charities. All the more so when the harsh competitive environment they face is taken into consideration.

Somewhat less widely known, but no less impressive, is the money-spinning performance of these cards for their financial providers. Well-documented research demonstrates that properly targeted affinity cards have an edge over comparable credit cards in the frequency with which they are used and the number of monthly purchases their owners make. To say nothing of the intangible benefits of good publicity and enhanced customer loyalty that accrue.

But what happens when the relationship between card provider and good cause sours? The festering unpleasantness between the Halifax and Mencap over windfall shares is an excellent case in point. What had been a prosperous and successful relationship, stretching back nine years, is being jeopardised by the backlash from the Halifax’s incorporation as a bank. Specifically, it chose not to compensate immediately those people with accounts held in trust, of which the disabled comprise the largest number. As far as can be judged, the Halifax’s motives were governed by robust commercial logic; certainly it had the law on its side, at the time.

Mencap, meanwhile, was left in an impossible situation. Either it rolled over and was reviled for prostituting itself, or adopted a stance of high principle and risked losing a significant stream of income. In the event, Mencap’s trustees went for the high principle, high-risk route.

Incredibly, they look like losing the money. As the deadline draws close after 18 months of bickering, the Halifax shows no sign of offering significant compensation. It’s hard to see what the bank gains from this intransigence – beyond an unenviable reputation for meanness and cynicism. The expected outcome may also force the British Heart Foundation and the Imperial Cancer Research Fund – the other partners in this otherwise successful affinity scheme – to take a critical stance, although they are understandably reluctant to do so.

That said, Mencap has occupied relatively favourable terrain from which to wage its campaign. The vast majority of its income comes not from voluntary contributions but trading fees and contracts. Not many charities are so financially independent. In that sense, the Halifax is unlucky to have received such bad publicity.

Cover story, page 28

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