Current Accounts

In this guide we investigate, score and rank the ethical and environmental record of 29 current accounts.

We also look at tax avoidance, fossil fuel investments, investments in Israel, and give our recommended buys.

About 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.

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What to buy

What to look for when choosing a current account:

  • Is it an ethical investor? Make sure that your chosen bank is clear about how it will invest your money. Keep an eye out for bank's ethical investment policies.

  • Does it pay its fair share of tax? Tax avoidance is a big issue in this sector with many banks operating subsidiaries out of known tax havens such as Switzerland and Luxembourg. Look for a company that is paying its fair share of tax.

Subscribe to see which companies we recommend as Best Buys and why 

What not to buy

What to avoid when choosing a current account:

  • Is it financing climate change? All of the big banks have extensive investments in fossil fuels, including the most damaging ones like tar sands and ultra-deep sea drilling. Also be aware of investments in the fracking industry.

  • Is it funding the Israeli military? War on Want released a report detailing the relationship between UK financial institutions and companies that sell arms and military equipment to Israel which have been used in the oppression of Palestinians. 

Subscribe to see which companies to avoid and why

Score table

Updated live from our research database

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Brand Score(out of 20) Ratings Categories Positive Scores

Our Analysis

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:

  1. HSBC (including First Direct and M&S bank),
  2. Lloyds (including Halifax and Bank of Scotland),
  3. RBS (including NatWest and Ulster Bank),
  4. Barclays 
  5. 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
  • Monzo
  • Cumberland.

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 European bank, founded in the Netherlands 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 stopped in 1999. 

Image: Triodos

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.

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. 

Bank Value of loans to relevant companies Shareholdings in relevant companies
Barclays £41.1 billion £1167 million
HSBC £19.3 billion £832 million
Lloyds Bank £43.2 billion -
RBS £16.6 billion -
Legal & General - £4521 million
Standard Life - £1300 million
Aviva - £801 million

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. 

App-based banks

In January 2018, it was revealed that online banking had overtaken visiting branches and that the proportion of transactions done in branches had fallen from 48% to 34% since 2016.

Online banking is offered by most banks so that you can access your account on the internet from your laptop or computer through the bank’s website. But, in response to this online trend, there are many companies that are developing banking products which suit the smartphone era.

Mostly, these are from mainstream banks but these developments have also spawned new ‘app-based banks’ which offer traditional banking services such as current and saving accounts, mortgages and credit cards. The only difference is that these banks solely exist as an app on your smartphone or tablet.

Some describe these app-based banks as ‘challenger banks’ due to the fact they are seen to be challenging traditional banking structures and services. It is certainly an industry which is seeing rapid growth:

What do they offer?

Firstly, they all offer an app – a programme that runs on your smartphone. Once you have downloaded the app you get access to different services:

  • Monzo, Revolut and Starling all do personal current accounts.
  • Revolut and Starling also do business current accounts.
  • Monzo and Starling are protected by FSCS whilst Revolut has a ring-fenced account at Lloyds Bank.
  • Revolut also does loans and travel & phone insurance. Starling also does travel debit cards

Secondly, they all offer analysis of your spending and they help people track money spent in real time. The Monzo app, for example, tells you how much money you can spend each month; notifies you when bills increase or are due to be paid; and even helps to reduce your bills by suggesting cheaper alternatives.

Thirdly, they offer transparency. Mostly this is around being clear about how they operate, what they offer and how their product works. Until recently, some of the companies in this market offered customers free overseas cash withdrawals.

However, due to the popularity of this service many of the companies faced high costs per customer. Monzo responded by asking its users how to solve the issue and customers voted to limit the amount withdrawn overseas per month.

Fourthly, it is about community. By getting user feedback on the way the app works, companies can “develop products that consumers want”. Monzo says:

“For too long, banking has been obtuse, complex and opaque. We want to change that and build a bank with everyone, for everyone. Our amazing community of users suggests features, tests the app and gives us constant feedback so we can build something we all love.”

What are the concerns?

The main concern is the protection of your financial information and money.

With regards to the protection of money, three out of the four companies listed in this report have the full £85,000 Financial Services Compensation Scheme (FSCS) protection. This means should anything happen to your bank you are protected up to £85,000.

Revolut does not appear to be protected by the FSCS. Instead money deposited with it is placed into a special ‘ring-fenced’ account at Lloyds Bank. If Revolut was to go bankrupt, money in this ring-fenced account would be protected.

However, if Lloyds collapses, consumer information website Money Saving Expert warns “Your money may NOT be protected. This is because it’s not counted as a deposit, in the way that cash in a savings account would be, and so it’s not as clear cut.”

With regards to the security of your data, they all offer similar security settings to those you get with traditional banking apps such as using passwords or passcodes. Atom also uses biometric security measures (using your voice or face to access your account). Starling and Monzo offer security measures such as Touch ID/Fingerprint scan.

What about ethics?

The advantage of these new banks is they don’t currently come with quite the same long-established ethical issues that are prevalent in the financial sector

Nevertheless, they are all backed by individual investors and venture capitalists who may hold investments across a wide range of other industries. 

No company had any information or policies about the environmental impacts of its operations. In particular it is disappointing that none of the companies mention the use of data centres which require large amounts of energy.

A report in the Guardian in December 2017 stated that “Data centre capacity is rocketing in Europe and Asia with London, Frankfurt, Paris and Amsterdam expected to add nearly 200 MW of consumption in 2017, or the power equivalent of a medium-size power station”. Although this was obviously not just down to the growth in app-based banking, this might be an area that the community of customers might want to ask for further information on.

Company profile

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.

Want to know more?

If you want to find out detailed information about a company and more about its ethical rating, then click on a brand name in the Score table. 

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