Current Accounts


Ethical buying guide to Current Accounts, from Ethical Consumer

Ethical buying guide to Current Accounts, from Ethical Consumer


This is a product guide from Ethical Consumer, the UK's leading alternative consumer organisation. Since 1989 we've been researching and recording the social and environmental records of companies, and making the results available to you in a simple format.

This guide includes:

  • Ethical and environmental ratings for 27 current accounts
  • Best Buy recommendations
  • Investing in climate change
  • Triodos' new current account
  • Israel and deadly investments

 

This product guide is part of the special report: Ethical Money

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Our ratings are live updated scores from our primary research database. They are based on primary and secondary research across 23 categories - 17 negative categories and 6 positive ones (Company Ethos and Product Sustainability). Find out more about our ethical ratings

 

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Last updated: April 2018 

 

 

 

 

 

Special Report

Ethical Issues in the Banking Industry.

 

 

 

Current Accounts

 
 
 

It is not hard to find something bad to say about banks – from tax avoidance and excessive pay to the bank bailouts that have ushered in the age of austerity.

In line with the current rise in carbon divestment campaigning, we also look at where banks stand on fossil fuels and renewables.

 

 

Widespread failure in bank ethics

 

Over 80% of current accounts are with the big five banks'. These banks have graced the bottom of our ethical scorecards over the years and continue to do so.

These are:

  • HSBC (including First Direct and M&S bank),
  • Lloyds (including Halifax and Bank of Scotland),
  • RBS (including NatWest and Ulster Bank),
  • Barclays 
  • Santander.

 

Image: Don't bank on the bomb report

  
 


 

 

Table Highlights

 

Tax avoidance is a big problem in the finance sector.

Below we list how each company on the table has scored in our "likely use of tax avoidance strategies" category.

 

Best rating

  • Triodos,
  • ICICI,
  • Clydesdale,
  • Nationwide Building Society,
  • Co-op,
  • Metro Bank,
  • Yorkshire Bank.

 

 

Middle rating:

  • Handelsbanken
  • RBS
  • Barclays.

 

Worst rating:

  • HSBC,
  • Danske Bank, 
  • Bank of Ireland (Post Office), 
  • M&S Money, 
  • Lloyds Bank, 
  • Tesco Bank, 
  • Virgin Money, 
  • TSB, 
  • Citigroup, 
  • Banco Santander.

 

Companies that scored a middle or a worst rating were marked down in the Anti-Social Finance column on our score table opposite.

 


 

 

Bank investments

 

We mark companies down for having investments in unsavoury areas. However, many financial companies do not declare their investments, making it harder to discover them.

We have thus primarily used several third-party reports in order to rate companies, including International Campaign to Abolish Nuclear Weapon’s report ‘Don’t Bank on the Bomb’, which lists investments in nuclear weapons, BankTrack’s reports on investments in damaging extractive projects, and Rainforest Action Network’s report ‘Banking on Climate Change’ which lists investments in the most problematic fossil fuels.

 

 

Climate change

 

    All of the big banks have extensive investments in fossil fuels, including the most damaging ones like tar sands.  The current account options that don’t come weighed down with a load of fossils are those offered by Triodos, Nationwide and Cumberland Building Societies (building societies don’t really invest), Clydesdale/Yorkshire Bank, the Co-operative Bank and Metro Bank.  The only one that currently invests seriously in renewables, however, is Triodos. 

     

     

    Fracking

     

    See our feature on fracking in our special report into finance, where we give details of which major banks are involved with fracking companies. The most involved are Barclays and HSBC, both of which not only provide banking services to fracking companies, but own portions of several of them. 

 


 

 

Triodos

 

The big ethical banking news in 2017 was Triodos launching its current account. Triodos is now in a good position to take over as the main UK ethical bank, and is our best buy for current accounts. 

Triodos is uniquely transparent about everything. Apart from Charity Bank, which only does savings accounts, it is the only commercial bank in the UK to provide an annual list of all the loans it has made.

It has an extensive ethical investment policy, going beyond ‘negative’ screening and only investing in businesses and charities that it judges to be of social or ecological benefit. In 2016, its largest lending categories were renewable energy (24% of total lending), private loans (14%) and healthcare (13%).

Triodos is a young Dutch bank, founded in 1980. It started as an anthroposophical initiative – part of the esoteric movement started by Rudolf Steiner, also behind Steiner Schools and biodynamic agriculture. However, formal links with the Steiner movement were severed in 1999. 

 

Image: Triodos Bank

 


Triodos’ new current account

The new current account is based on a new approach for the UK as, instead of levying huge charges for going overdrawn without agreement, which are often paid by the poorest, it charges a £3 per month flat fee for having the account. You cannot go overdrawn by accident as the payments just don’t go through, but it is possible to arrange an overdraft facility of up to £2,000. 

Ethically, there is a lot to say for this account. There are, however, a couple of drawbacks from a consumer perspective. The first is that, because of the lack of UK branches, you can’t currently pay cash into your account, only cheques. 

The second is that Triodos is exceptional among UK banks in that it is covered by the Dutch deposit guarantee scheme rather than the British one. Both schemes guarantee deposits up to £85,000 per person in the case of the bank going bust. In theory, the Dutch version should be just as good, but if you ever did need to go to court, it would be much harder to bring a case in a foreign court.

 


 

 

Israel and 'Deadly Investments’

War on Want released a report in July 2017 on the relationship between UK financial institutions and companies, such as BAE Systems, Boeing and Lockheed Martin, which sell arms and military equipment to Israel that have been used in the oppression of Palestinians. 

It looked at two main forms of support: holding shares in relevant companies, and providing loans to them. The loans and investments of financial companies which appear in this guide are shown in the table below. 


Table: loans and investments for banks

 

All these companies received a mark in the Arms & Military Supply column on the score table.

The Co-operative Bank is named as the one major UK bank that is not connected to arms sales to Israel either through shareholdings or financing. (The report did not include smaller banks such as Triodos.)

Following on from this report, the Stop Arming Israel coalition organised a week of action targeting HSBC specifically. Activists closed down two branches of HSBC bank, distributed flyers and took online action. The campaign is set to continue in the coming year. 

For more information, see the Palestine Solidarity Campaign

The full War on Want report: ‘Deadly Investments, UK bank complicity in Israel’s crimes against the Palestinian people’, is available online. 

 

 

     

    Company behind the brand

     

    Metro Bank was launched in 2010 by Vernon Hill, a US billionaire who started in Burger King restaurants, and backed by other Wall Street billionaires, including some rather controversial characters: Ken Moelis has been advising hedge funds over the restructuring of Co-op Bank, and Steven Cohen is a hedge fund billionaire whose firm, SAC Capital Advisors, pleaded guilty to insider trading in 2013

    Metro Bank’s intention was to focus on customer service, and its branches offer extended opening hours and pet-friendly policies with free dog biscuits. However, there have been less flattering reports about its customer service towards victims of fraud – the Financial Ombudsman Service is investigating cases in which it has refused to cover customers who have had their savings stolen.

     

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