Changes with the Co-operative Bank could prove to be an incentive for the movement, according to co-operators at an open conference in Manchester to discuss the implications of the challenges faced by the Bank.

As part of the Ways Forward for the Co-operative Movement event speakers analysed existing financial co-operatives, looking at a new strategy for banking and insurance within the movement.

The conference, organised by the Co-operative Business Consultants, agreed on the need to redefine what democracy means and what mechanisms were needed to empower members. Referring to the Co-operative Bank’s crisis, Vivian Woodell, chief executive of the Phone Co-op, said members should take this opportunity to strengthen the Group, rather than feel defeated.

“There are lessons to learn from the wider co-op movement. The problem is not that we have too much democracy, but that the democratic structure wasn’t working,” he said.

He argued that the Group should consider turning its regions into independent societies, adding that evidence proved regional independent societies were more successful.

“Members should have higher expectations of how the business is managed. We all share responsibility and we need to accept this,” he said, encouraging members to speak up about the problems within the Bank and the Group. “You become complicit if you keep your head down”, he said.

Peter Couchman, chief executive of Plunkett Foundation, which supports the growth of village co-operatives, also participated in the event. He said there was a danger of focusing on what went wrong rather than on what were the lessons to take from that. Citing the organisation’s founder, Horace Plunkett, he warned about the menace of big co-ops becoming soulless corporations.

He said that individual wrong doings were not the only problem within the movement, but rather the culture that enabled that. He called for a federation of aggressive co-operators, arguing that “co-operators are far too nice to each other.”

Members need to challenge each other more to increase accountability, thinks Mr Couchman. “The fundamental aspect of democracy is that it exists to meet the needs of the members and we have lost the mechanisms to do that,” he said.

Contesting the decision to take over Britania in 2010, John Mann, Labour MP and member of the treasury select committee that is currently investigating the Co-operative Bank, said members should have had a greater say in the process.

“Whatever model is enhanced if it does not enable members to have a say when important decisions are taken than that democracy is worthless, the concept is worthless.”

Mr Mann also expressed concerns over that fact that hedge funds might not be interested in co-operative values. He said: “The Co-op Bank went wrong because it bought the Britannia, who had a wrong business model.”

He believes the solution to the crisis is developing a “forward looking, simple business model” while “tearing up the democracy at the top and reform it in a way that is actually rational”.

Frances Coppola, former banker turned financial writer also questioned the acquisition of Britania, saying the Co-op Bank’s ambition to get bigger and challenge the big banks was what brought it in this situation.

“In a co-op model, the moment you start diluting your capital you are on the path of losing control of your organisation, you need to think very carefully whether the co-op should be growing. You want to be keeping your co-operative small enough so that members exercise control, but not too small because very small co-operatives are risky,” she said.