Last updated: March 2014
The Move Your Money ranking of banks
In June 2013, Ethical Consumer was asked by the Move Your Money campaign to help produce a detailed ethical ranking of UK banks. Rob Harrison explains.
Although it is only two years since our last ethical review of the banking sector (Issue 135), the level of concern amongst civil society groups about the culture and politics of banking remains high. Move Your Money – the specialist banking sector campaign group – has flourished amidst general agreement that encouraging ordinary customers to switch accounts from the worst to best will be an important driver for change. Move Your Money claim that 2.4 million customers have switched accounts since the 2008 banking collapse.
This increased interest led to Ethical Consumer receiving funding to produce a more detailed review of the banking sector than we are normally able to resource. The results of this research are summarised on the table below and are also published on the website at moveyourmoney.org.uk. After summarising the key buying advice that comes out of this research, we look at the implications of the Co-op Bank’s recent troubles, some of the criteria behind the rankings and in detail at the ‘Supporting the Economy’ section.
Choosing an account
The table shows our rankings based on 15 ‘Honesty, Customer Service, Culture, Supporting the Economy’ criteria, and our Ethiscore and then gives an overall ‘Switch Score’ in the right hand column. It is ranked from Best (score 100) to worst (score 4).
Savings accounts and ISAs
All the brands on the table offer saving accounts and ISAs to people living anywhere in the UK.
Both of these products are also available from the local building societies (listed with just their Ethiscore and overall Switch Score) in the table below. They only offer accounts to people in their locality or region, but all score well on most of the Move Your Money criteria.
Only those brands with a tick in the Current Accounts column offer current accounts – so the choice is not as wide. The big news in this area is the move of the Co-op Bank out of the Co-op Group to become a separate entity.
Don’t forget credit unions
Although this research did not stretch to looking at credit unions, they would, in most cases, score 100 in a switch score. All offer savings accounts (often with interest) and some even offer basic current accounts too. To find one in your local area use the www.findyourcreditunion.co.uk website and enter a postcode. The failure of UK credit unions to match the growth of their US equivalents has sometimes been ascribed to their failure to attract middle class (or more financially stable) savers in sufficient number. If you are able to save at least some money in this way then you would arguably be supporting a valuable social institution locally.
Behind the Move Your Money ranking
The ethiscore – one fifth of the Move Your Money Switch Score comes from Ethical Consumer’s own ethiscore. Our regular readers will be familiar with the fact that this, in the case of banks, looks in detail at who the banks are lending money to. High on the list of current concerns around ethical lending are:
The ethiscore on the main Move Your Money ranking table has been slightly adjusted from that which appears on the Ethical Consumer website and in our other banking reports. To avoid ‘double counting’, the following criteria which appear in both the ethiscore and Move Your Money rankings have been stripped out of the former:
- Anti-social Finance
- Political Activity
- Company Ethos
- Product sustainability.
Fines – includes LIBOR manipulation as well as mis-selling and money laundering.
Political Lobbying – as well as Ethical Consumer’s usual trawl of political donations and other sources, we downgraded companies for their membership of the British Bankers’ Association which we identified as having lobbied against the retail/investment banking split which many in civil society see as key to a stable economic future. Triodos, a BBA member, have fed back to us on this point, and have argued that they are lobbying to change the BBA from within.
Customer Service – there are good publicly available data on the number of complaints and Ombudsman referrals that each provider has received. Because banks with millions of customers will always have more complaints than those with thousands, we calculated a ratio of complaints to the size of customer loans to give a fairer ranking in each case.
Customer Power – is a simple metric which gives a higher ranking to mutuals.
Directors’ Remuneration – for this we ranked those companies with no director earning over £500,000 per year as best, between £500,000 and £1 million as middle, and over £1 million as worst.
Bonuses – taking a slightly less forgiving approach than the EU, this simple metric gave a worst rating to providers paying bonuses greater that 50% of the CEO’s salary.
Women on the Board – because most boards had at least one woman non-executive director, and very few had more than 25% women, we ranked worst as 0-10%, middle as 10-25% and best as greater than 25%. Only the Progressive Building Society had a woman chief executive, though it is worth noting that Santander’s UK subsidiary is headed-up by a woman too.
A full explanation of all the ranking elements and the ranking decisions for all the companies appears in our 204 page Evidence Base document which is downloadable from this website as a PDF.
Co-op Bank developments
Only a month after the release of the Move Your Money ranking, the narrative of an inexorable rise in alternative banking was dealt a serious blow by the announcement that the Co-operative Bank – the movement’s leading brand – was in financial trouble (for reasons unconnected to its ethical stance).
Its bailout plan – now complete – didn’t call on the taxpayer for help but, ironically perhaps, relied on a group of mainly US-based hedge funds – seen by many as the antithesis of socially responsible business.
Opinion is divided on the likely outcome of this arrangement, but Ethical Consumer has placed itself firmly in the camp that believes that all is not lost. We formed the Save Our Bank campaign in October and have received assurances from the board that the current Ethical Policy is still in place.3
We are urging Co-op Bank customers not to close their accounts at this stage, but to join a powerful group of customers campaigning to retain the ethics and for a plan to return to mutuality.
For more information and to sign up as a supporter of the campaign, go to the saveourbank.coop website.
TSB and Williams & Glynns
More encouraging news has come with the announcement that the TSB is likely to be completely floated off from Lloyds Bank as a ‘local’ (possibly more ethical) company, and that RBS has similar plans for Williams & Glynns.
Potentially these new entrants will score highly in ethical or switch scores, but until they become formally separated from their parent companies, a new ranking will have to wait.
Special thanks for their help on the Move Your Money ranking should go to Richard Goulding, Heather Webb and Leonie Nimmo from Ethical Consumer, Laura Willoughby from Move Your Money and Tony Greenham from NEF.