Is There Such A Thing As Ethical Banking?


Are all banks as bad as they have been tarred just lately? Have they all been involved in mis-selling PPI, giving bad advice and rigging interest rates? In short, is there anywhere you can put your hard-earned salary and feel good about the people you are dealing with?

The high street banks have all been involved to a greater or lesser extent in the on-going PPI mis-selling scandal. Millions of people have been claiming back billions of pounds in premiums for PPI policies which were meant to pay their premiums if they couldn’t work through accident, sickness or unemployment.

This is now being seen as the biggest mis-selling scandal in UK banking history, but it is just one of the problems which have be-set the industry in recent years.

Barclays and Royal Bank Of Scotland have each been fined millions for their part in the LIBOR rate fixing scandal and HSBC have just been forced to apologise over revelations that they have been laundering billions for terrorists and drug cartels.

There is an argument that we are all effectively involved in these problems because we leave our money in savings or credit accounts.

When we put money into a bank it doesn’t just sit in a big safe behind the counter waiting for us to come in and claim it. The bank invests it in a myriad of ways to fund its investments and loans and those loans are made to all kinds of companies world-wide, some of whom you might never choose to be personally involved with like arms manufacturers, employers of child labour or companies who test their products on animals.

So what can we do about it? Are there any safe havens for our cash run by people we would like to do business with?

Research by a number of organisations shows that there are:

Charity Bank is actually a charity itself and so isn’t interested in making profits for shareholders. Instead they concentrate on social goals. Depositing your savings with them will fund its loans and they only lend to charities so you won’t have any sleepless nights about what your money is being used for.

Triodos  – based in the Netherlands but also operating in Britain Triodos is another contender. Their mission is to ‘make money work for positive social, environmental and cultural change. The only problem banking with them is they don’t have any branches in the UK so you have to manage your accounts on-line, by phone or by post.

The Co-operative Group is a more convenient way of banking and has been hailed as the most ethical of the high street banks.

Co-operative Bank, the on-line subsidiary Smile and Britannia are all mutual businesses which means they are owned by their own customers and there is not a fat cat banker amongst them. Their lending policy is as transparent as the other two with public policies on who they do or don’t lend to. They are also the only ethical bank to offer a current account to their customers.

Building societies are another alternative because, like the Co-op, they are mutually owned. Ethical Consumer magazine gives its highest rating scores to the Coventry, Cumberland and Leeds societies for their current accounts.

A final possibility, if you are lucky enough to have one close to you, is a credit union. These are financial co-operatives run for the benefit of their own members and they too offer current accounts.

8 Responses to Is There Such A Thing As Ethical Banking?

  1. Good post. I think credit unions might be the best option to pursue if you’re looking for a banking option that is concerned with the well being of those they serve as well as being above board in how they act. Another option might also be the smaller community banks that might not be tied in to some national branch network.

  2. Jose says:

    In the states credit unions are typically the best options, they usually have the best loan rates and actually pay a decent (relatively speaking) interest rate on their accounts. I don’t do any business with the Top US banks, they have such a rigged fee structure that you have to keep a ridiculous amount in your accounts to avoid fees.

    • I didn’t realise account fees were a standard part of US banking, over here we don’t tend to pay fees unless you go overdrawn or a payment gets returned unpaid. There’s been talk of this changing in future though.

  3. Jon says:

    How do banks get away with charging so many fees is beyond me. Its probably all in the small print but who has time to read it??

    • Nobody really reads that stuff, I think there should be some set legislation that forces all banks to abide by the same rules when it comes to fees. I know it would be tough to enforce but it’s necessary.

Leave a Reply

Your email address will not be published. Required fields are marked *