Savings Accounts

In this guide we investigate, score and rank 40 savings account brands.

We reveal the innovative organisations looking to lever the power of people's savings for positive social and environmental change and give our Best Buy recommendations

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.

What to buy

What to look for when choosing a savings account:

  • Is it an ethical investor? Make sure that your chosen brand is clear about how it will invest your money. Keep an eye out for ethical investment policies. The sector is lucky to have three innovative organisations looking to lever the power of people’s savings for positive social and environmental change.

  • Is it a mutual? Is the organisation owned by and run for the benefit of its members rather than short-term financial gain? Savings accounts that are by mutual organisations like building societies have traditionally been a more ethical choice.

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

What not to buy

What to avoid when choosing a savings account:

  • Is it financing climate change? Many banks have extensive investments in fossil fuels, including the most damaging ones like tar sands, ultra-deep sea drilling, and fracking.

  • 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. 

  • Is the company a likely tax avoider? Secrecy and aggressive tax avoidance continues to pervade the banking sector. Avoid banks who lack robust tax policies.

Subscribe to see which companies to avoid and why

Score table

Updated live from our research database

← Swipe left / right to view table contents →
Brand Score(out of 20)

Our Analysis

The banking sector has been the target of numerous campaigns over the years with tax avoidance, excessive directors' remuneration, investments in the fossil fuel industry and investments in nuclear weapons continuing to be key pressure points.
 
Despite the international 'Equator Principles' encouraging greater transparency around responsible decision-making in banks, they do not appear to have resulted in much movement within the practices of the mainstream banking sector.

Many of the banks featured in this guide also appear in our guide to current accounts. We cover many of these companies and the issues associated with them in that guide.

Ethical alternatives

In addition to the banks, savings accounts are also offered by mutual organisations like building societies which have traditionally been a more ethical choice and score better on our score tables. See below for more details on building societies.

Indeed, there is a clear divide on the table between the building societies and those banks with ethical lending policies, which are scoring roughly twice as much as the banks below them.

Since we last looked at this sector, The Co-op Bank’s score has improved, largely because the Co-op Group, which includes the Co-op supermarkets, no longer has a 20% stake in the bank.

Table highlights

We have highlighted two anti-social finance issues – tax avoidance and directors’ pay – and the funding of both fossil fuels and nuclear weapons. Three names cropped up in all four of these areas – Santander, Citibank and HSBC.

Fair tax and unfair tax

In March 2016, Ecology Building Society became the first building society to receive the Fair Tax Mark, demonstrating the Building Society’s openness and transparency regarding its tax affairs.

Unfortunately, this positive news runs counter to the secrecy and aggressive tax avoidance that continues to pervade the rest of banking sector. We rank companies on their likely use of tax avoidance strategies, by looking at the type of subsidiary companies they have in tax havens. Companies that scored a worst or middle rating were marked down in the Anti-Social Finance column.

Worst rating: Virgin Money, Danske Bank, Bank of Ireland, Santander, Lloyds Banking Group, Citigroup, HSBC, Tesco Bank, and TSB.

Middle rating: Handelsbanken, RBS, Coutts, NatWest, Ulster Bank, and Barclays.

Best rating: Triodos, The Co-operative Bank, Charity Bank, Clydesdale Bank, Yorkshire Bank, ICICI Bank, Al Rayan Bank, Sainsbury’s Bank, and Metro Bank and the following building societies: Chelsea, Ecology, Norwich & Peterborough, Nationwide, Coventr, Cumberland, Kent Reliance, Leeds, Newcastle, Principality, West Bromwich, Skipton, Yorkshire.

Excessive Directors’ Remuneration

We mark companies down for paying their senior staff more than £1 million, as we believe more than this to be excessive in a world of huge inequalities. Companies were marked down in the Anti-Social Finance column.

The following companies in this savings guide paid more than £1 million in 2016:

Citibank, HSBC, Lloyds Banking Group, Santander, Co-op Bank, Barclays, Tesco Bank, TSB, RBS Group, Nationwide Building Society, J Sainsbury, CYBG (Clydesdale and Yorkshire Banks), Virgin Money, Handelsbanken, Danske Bank, Kent Reliance, and Metro Bank.

The Directors’ Pay report on page 15 lists the top salaries of all the companies in this guide, even if they are below  £1 million. 

Funding nuclear weapons producers

Eleven banks in this savings guide were directly involved in the financing of the nuclear weapons industry, according to the latest ‘Don’t Bank on the Bomb’ report:

Old Mutual (part owns Kent Reliance), ICICI Bank, Santander, Lloyds Banking Group (Bank of Scotland, Birmingham Midshires, Halifax, Lloyds, Scottish Widows), Danske Bank, TSB Bank, Citibank, HSBC (HSBC, First Direct, part owns M&S Money), Bank of Ireland (Post Office), and RBS Group (Coutts, Ulster Bank, RBS, NatWest).

They all received a full mark in the Arms & Military Supply column.

Funding climate change

Five companies in this guide are listed in the latest report looking at who funds extreme fossil fuels, like tar sands, Arctic oil and coal mining:

Citibank, Barclays, Santander, HSBC, and RBS Group (Coutts, Ulster Bank, RBS, NatWest).

They all received a mark in the Climate Change column.

Building societies: for people not shareholders

The Thatcherite reforms and deregulation of financial services, which took place in the 1980s, freed up international capital flows. Moves were made to ‘release’ the mutuals sector from the stultifying bonds of ‘unreasonable regulation’. Short-term self-interest – both among directors and ‘carpet baggers’ – nearly destroyed the building society sector in a rush to convert to banks. Now, with many of the converted banks either in foreign ownership or in ‘intensive care’ as a bailed-out bank, it is the societies that stayed behind and resisted these temptations that can feel a little smug.

There are now 44 remaining building societies, the number having been in steady decline since 1940 when there were 952. We have rated 12 of the larger ones. The other 32 were only excluded for reasons of space, but will also be a good ethical option for many people.

In our rankings, building societies all get a positive Company Ethos mark for being ‘mutuals’, i.e. owned by and run for their members. All customers are members and are able to vote at AGMs or stand for election to the Board. This is unlike banks, which are run to maximise profits for external shareholders. Mutuals have a fundamental difference at the heart of their organisation.

At Ethical Consumer, we have noticed that, not only have mutual financial organisations proven more stable because they generally hold lower risk investments, but mutuals generally tend to deliver more ethical business behaviour.

The banks’ drive for quarterly profits is almost always the same drive that is ignoring ethical issues whatever the long-term cost to the planet. Built on short-termism, shareholder-owned businesses and profit-seeking markets have not just proven unable to manage a stable financial system, but they have also failed to deliver on the even more vital tasks of protecting the biosphere and delivering sustainable energy solutions.

Building societies also perform better in our rankings than banks largely because regulations stipulate that at least 75% of a building society’s assets must be held in residential property mortgages, rather than invested in companies with dubious ethical records. This means that they can only be ‘mortgage’ or ‘building’ focused and, as such, financially quite conservative. So far as we can tell, most do a little lending to companies but almost always to small businesses to buy commercial buildings in their local areas.

In many cases, the best mortgage rates may be restricted to those within your geographical area. And it is this local element to the smaller societies, once looked down upon as parochial and staid, that has attracted attention from radical economists. If the money you save is being lent to people in your area to invest in property, then you are contributing to the economic success of that region, rather than permitting these savings to ‘leak out’ to more lucrative property bubbles elsewhere in the country. This aspect of building societies is very similar to credit unions’ ethos. See our feature on credit unions.

All building societies do mortgage lending and offer savings accounts and most offer ISAs. Two of them – Cumberland and Nationwide – also do current accounts. Postal and internet banking means that most offer at least some of these services nationwide.

To find your local building society search the members list on the Building Societies Association website.

A super-ethical niche

The savings account market is also lucky to have three innovative organisations looking to lever the power of people’s savings for positive social and environmental change:

  • Ecology Building Society,
  • Triodos, and
  • Charity Bank.

Each get a positive Company Ethos mark on our rankings table for offering a social and environmental alternative to the mainstream banking industry. They also get an extra Product Sustainability point for having an ethical lending policy ([E] on the score table).

Ecology Building Society focuses its lending on projects that offer the greatest gains in terms of carbon reductions and environmental impact, with its ethical lending policy prioritising sustainable housing practices, sustainable lifestyles, sustainable economic activity, and other ecologically positive projects and ventures. This includes mortgages for self-build and renovation housing projects, buying small woodlands, buying a houseboat and a mooring, and community housing.

Triodos offers financial services to a range of projects including organic food and farming businesses, renewable energy enterprises, recycling companies and nature conservation projects.

Charity Bank only lends to charities, social enterprises and organisations with a charitable purpose, and stated that it conducted a social impact assessment for each loan. Every year it publishes a loan portfolio report detailing all the borrowers it had supported with loans and the projects that the money provided by savers had helped to fund. Loans in 2017 included a couple of hydroelectric renewable energy projects.

Triodos and Charity Bank both publicly disclose their investments – a great practice for a sector that is resistant to openness and accountability. They get an extra Product Sustainability point for this ([E+] on the score table).

The Co-operative Bank also continues to have an ethical policy, although it does not score so well overall in our rankings.

Islamic banking

Interest is forbidden in Islam. Islamic banks thus theoretically avoid it, using a variety of methods. The main ones are either buying an item for a customer and then leasing it back to them, or using a profit-and-loss sharing paradigm, in which borrowers and depositors share profits and losses with the banks.

However, in practice, most Islamic banking is actually very similar to standard banking. For example, the bank ‘sells’ a stock of gold to a customer, with payment to be made monthly over a year; the customer then immediately ‘sells’ the gold back, for a sum of cash that is somewhat less than the amount that they will pay over the year. In other words, they end up with what is basically a standard loan, with a standard interest rate.

The fact that the bulk of Islamic banking is Islamic in name only is a point which has been extensively made within the Islamic community.

There is one Islamic bank in these guides – Al Rayan, which does current accounts, savings accounts and Cash ISAs.

Company behind the brand

RBS (which also owns NatWest, Ulster Bank and Coutts),has not been redeeming itself very well after the disgrace it incurred during the financial crisis. Not only are more skeletons regularly being pulled out of its closet, so it seems that there are still plenty being shoved in there.

RBS is still three-quarters publicly owned, although the government has stated that it intends to sell its stake by March 2019. RBS’s share price has collapsed and it looks like this will be at a loss in the tens of billions, which basically means a huge transfer of public money into wealthy private hands.

In April 2014, the Independent reported on claims that RBS’s ‘Mentor Service’ was helping hundreds of businesses to draw up zero-hours contracts for their employees. Recent leaked documents also revealed that around 2008, RBS paid a corporate intelligence firm called C2i to infiltrate activist political groups that might challenge its business. In December 2017, RBS told the Guardian that it “no longer uses corporate intelligence firms”.

Want more information?

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. 

This information is reserved for subscribers only. Don't miss out, become a subscriber today.

Start your 30 day trial today!

Ethics made easy - comprehensive, simple to use, transparent and reliable ethical rankings. Subscribe today for a wealth of data at your fingertips.

We will take payment when you order, but you can cancel by phone or email within 30 days for a full no-questions-asked refund!

Start your 30 day trial today!