Bank 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.

Your guide to personal carbon divestment. Which banks are investing in fossil fuels? How to switch to a more ethical option. 

 

This guide includes:

  • Ethical and environmental ratings for 32 current accounts
  • Best Buy recommendations
  • Alternatives to mainstream banking
  • Big five banks and fossil fuels
  • Which banks support renewables?

 

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

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Last updated: July 2016 

 

 

 

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.

  
 

In the ranking table above where a bank held investments in, or provided banking services for companies Ethical Consumer had criticised, we marked them down. For example, HSBC lost marks for being listed in Don’t Bank on the Bomb’s Hall of Shame, for having current loans to 12 nuclear weapons manufacturers.

 

Image: Dont bank on the bomb in ethiical shopping guide

 

All the banks on the table – except Metro Bank and Al Rayan Bank – lost marks for connections to likely tax avoidance. Either they or their parent company or major shareholders had subsidiaries in tax havens that did not appear to be serving local populations, or they appeared to be facilitating tax avoidance for others. In the case of the Post Office, it was the tax-haven subsidiaries of the Bank of Ireland that caused the problem, as it is the BoI that provides its current accounts.

More than half the banks were marked down for excessive pay within their company group (see table below).

 

Banks with directors' remuneration over £1million:
 


Table: Banks with directors remuneration over 1million

 

Many banks have also pursued an aggressive sales culture which has resulted in compensation payouts of billions for mis-selling of Payment Protection Insurance (PPI), and all of the ‘big five’ except Santander sucked up billions in bailouts after the 2008 financial crisis, but show little sign of changing their ways.

 

 

 


Which banks invest in fossil fuels?

 

Over 80% of current accounts in the UK are with the ‘big five’ banks. These are HSBC (including First Direct and M&S bank), Lloyds (including Halifax and Bank of Scotland), RBS (including NatWest and Ulster Bank), Barclays and Santander.

Unfortunately, according to the Move Your Money campaign, these banks are among the biggest investors in climate change.[1] They all lost marks on our table for having a boycott call against them, as Move Your Money calls on customers to remove their money from banks who are investing in fossil fuels. Barclays Bank is even the majority shareholder of a fracking company, Third Energy. Other links are revealed in the ‘Fracking Bankers’ article.

To manage the environmental and social risks of the investments they make, all the big banks have adopted the international ‘Equator Principles’. However, the banking watchdog BankTrack is concerned that this contains a “complete lack of any meaningful commitment on combating climate change”.[2]

And all five of these feature in the 2015 Fair Finance guide which lists the top 25 global banks funding fossil-fuel projects around the world. Read about this guide in our ethical finance report. 

 




Do any banks support renewables?
 

 

Only The Co-operative Bank states its support for renewable energy organisations alongside a commitment not to provide banking services to the fossil fuel industry. It has, however, recently sold many of its renewable-energy assets to raise cash, and does not control the hedge-fund investments of some of its owners. 
 

Image: Renewables in ethical shopping guide

 

No building societies offering current accounts – nor the Metro Bank, which also came high on the table – are making a point of supporting renewable energy, but neither do they invest in fossil fuels.

Triodos Bank also have an excellent record in supporting renewable energy and are likely to top the table when their UK current account becomes available in early 2017. 

 

 
 


Switching to a better account

 

One of the official responses to the 2008 crisis has been support for customers to switch accounts. This was supposed to encourage competition in the market and, in 2013, a 7-day switching service was introduced which makes switching safer, quicker and easier.

Over 40 banks and building societies are signed up to the service, including our recommended providers Co-op/Smile and Nationwide. These three also came in the top five for best customer service according to users of moneysavingexpert.com. Other providers will usually have an account switching service to help you but it may take longer.

 

 

Mutuals and Credit unions

 

Mutuals and credit unions are often considered to be ‘safe havens’ for ethical banking – scoring well in a number of ranking exercises including Move Your Money’s and our own Ethiscore ranking.

New current accounts with local credit unions, which will hopefully be available in 2017, will also be a top recommendation when they come on stream. Read more in our feature on credit unions. 

 

 

 

Company behind the brand

 

Lloyds Banking Group is currently the largest retail bank in the United Kingdom and one of the five biggest UK banks to be targeted by the Move Your Money campaign over its investments in fossil fuels.

According to the ‘Undermining Our Future’ report published in November 2015, Lloyds Banking Group gave $10.047 billion in loans and underwriting to selected fossil fuel companies compared to $2.664 billion to selected renewable energy projects during the second half of the report’s study period (2009-2014).

Lloyds is also involved in projects and activities that are considered by BankTrack to be “problematic in the light of the sustainability commitments of this bank”, including Cerrejón coal mine in Colombia and the Great Barrier Reef Coal and Gas Exports.[3]

 

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References:

1 http://moveyourmoney.org.uk/wp-content/uploads/2014/10/Move-Your-Money-Divest-Full-Report.pdf

2 www.banktrack.org/show/pages/equator_principles

3 www.banktrack.org/show/bankprofiles/lloyds_banking_group_plc#tab_bankprofiles_dodgydeals

 


 

This product guide is part of the special report into ethical money. See what else is in the report.


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Issue 162