Other ethical options
Building Societies and mutual ownership
Savings accounts are also offered by building societies, which have traditionally been a more ethical choice and are scoring roughly three times as much as the big banks below them.
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.
Regulations stipulate that at least 75% of a building society’s assets must be held in residential property mortgages, so they are much less likely to be lending to companies with dubious ethical records.
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 our new Climate Change rating, we are not yet expecting building societies to discuss the climate impacts of their lending. However, moves are being made towards green mortgages in the sector, and we will explore more when we update the Mortgages guide next.
In March 2016, Ecology Building Society became the first building society to receive the Fair Tax Mark, demonstrating its openness and transparency regarding its tax affairs.
In December 2018, Leeds Building Society also became Fair Tax Mark accredited, becoming the first national high-street financial institution certified by the FairTax Mark.
All building societies do mortgage lending and most offer ISAs as well as savings accounts.
Three of them – Coventry, Cumberland, and Nationwide – also do current accounts. Many offer services nationwide but others are only open to savers in a specific region.
To find your local building society, search the members list on the Building Societies Association website. We have only covered 11 of the 43 building societies in the UK due to space and resources.
Credit unions are a widespread but lesser known option for savings accounts and other financial services. As there are around 400 in the UK, we have not included them on our table, but we do recommend them for savings accounts.
Like building societies, they are mutuals owned and controlled by their members, not by external shareholders pushing for maximised profits through dodgy investments and shareholdings.
Credit unions pool their members’ money to make small loans in the community, providing an accessible and affordable alternative to the high interest rates charged by payday loans and loan sharks.
Credit unions pay out an annual dividend to savers, based on the annual profit made, and some pay interest too. There are lots of ways to pay in, including direct deductions from your wages.
To find your local credit union, search the Find Your Credit Union website run by ABCUL – the Association of British Credit Unions.
See more information about credit unions.
The Co-operative Bank continues to have a sector-leading ethical policy, with a lot of detail on who it will not lend money to. It does not score so well overall in our rankings because of the activities of some of the investment groups which now own it. Customers have the option to join the independent Customer Union for Ethical Banking, which works to hold the Coop Bank to account, and one day bring it back into cooperative ownership. The CUEB came out of the Save Our Bank campaign, launched after the Coop Bank was compelled to sell most of its shares to private investors in 2013, in order to survive.