Crisis, what banking crisis? The rise of ethical banking in Britain

(REUTERS)

As far as the UK’s ethical banking sector is concerned the steady stream of headlines from the interest-rate fixing Libor scandal to the HSBC money laundering for drug barons has proved to be a marketing campaign from heaven.

Put simply the British public has had enough of the Big Banks which are now seemingly beyond the control of either the courts or government resulting in a boom for the UK’s ethical banks.

“Since January we estimate that half a million people have switched their current accounts to ethical alternatives,” says Louis Brooke from the Move Your Money campaign which launched earlier this year.

“People are now moving their money because they no longer trust their bank and want an alternative which has more integrity.”

If you’ve never heard of an ethical bank before then check out the Ethical Consumer’s Buyers’ Guide to ethical current accounts which tells you everything from what an ethical bank is to how to move your accounts.

So just who are the winners in this ethical finance revolution?

The Co-op Bank and its online banking arm Smile are the only mainstream UK banks that operate a strict ethical policy and have witnessed a 97 per cent increase in customers requesting to switch their current accounts over to the Co-op.

Mutually owned building societies are booming too. The Nationwide for example has recently reported a whopping 85 per cent week-on-week increase in new account enquiries.

Mutuals are considered to be ethical because being mutually owned by their members profits are ploughed back into the business for the good of borrowers and savers rather than shareholders.

Ethical savings accounts are also experiencing spectacular growth.

Triodos Bank which only invests in companies that have social or environmental benefits has seen record levels of interest with the number of new customer accounts rocketing by 83 per cent.

Charity Bank which only lends to charities has also witnessed a massive growth of 200 per cent in the first six months of the year compared to last year.

Over at the Ecology Building Society which only lends on properties that have a clear environmental benefit, savings account openings for the first half of the year are up 33 per cent and at the height of the media coverage over Liborgate web traffic was up 481 per cent year on year.

The current revolution in ethical banking could well prove to be a significant moment for the wider ethical consumer movement.

This is because many believe that because finance is so interconnected with all areas of the economy and life, choosing ethical finance is actually one of the most powerful things that you can do as a consumer.

However whilst the past decade has seen the mainstreaming of everything from organic carrots to Fairtrade coffee, ethical finance has somehow missed out on the big-time, largely because it’s widely recognised that you’re more likely to get divorced, change job or even move your home than change your bank.

So are we witnessing a historic tipping-point where ethical finance finally becomes mainstream?

“What’s happening is an important first step to show that there are alternatives to mainstream banking,” cautions Brooke who predicts more banking scandals to emerge over the coming months.

“This will lead to sustained growth for the ethical finance sector.”

Rob Harrison, editor of Ethical Consumer likens the campaign for ethical banking to that of the Barclays Bank boycott of 1970s and 1980s around its involvement in the apartheid regime in South Africa.

“The changes people are demanding of the current banking sector at present are not going to happen quickly,” accepts Harrison. “I think what we’re seeing here is much more like the South Africa campaign. Fundamental, but ultimately winnable in the long term, even if the goal looks impossible from here.”

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• cramberepetita

  Poor article. No pun intended. Where is Roger Hayes http://www.lawfulbank.com? He of the British constitution Group fame. A bank that will lend without interest. Seems incredible but true. Sign up, and sign out of Cameron’s big Corporate society.

• hervicus

  Your corporate ethical code is only the end-point of ethics. Ethics is the investigation and philosophy of morality, so your concentration on the agreed end-point (the code) is missing out on most of what ethics actually is. Ethics is a living process investigated and debated by an individual or a group. The dialogue can be external or internal.The code is not a process, so at its worst it is maladaptive.

  Stonedwolf’s comments below point out one of the dangers of confusing the ‘code’ with the process of ethical dialogue.

• ChrisClarkGold

  A story to be cheered! When the Icelandic government let their big banks fail and replaced them with smaller banks, not only did people turn to them in flocks, but the Icelandic economy reversed course and is now growing at around 3% per year.

  Let’s have more of these major bank desertions.

• cramberepetita

  roger hayes, lawfulbank.com….now that’s ethical.

• rtj1211

  If you have the sort of ethics you have, I suspect you are unlikely to be accepted into the CIA in the first place.

  If you think you have hours up to a few days to stop a terrorist plot potentially killing thousands, the grey areas about whether waterboarding is acceptable become more real. I don’t know what I’d do in that situation, but I suspect most would say: ‘if it’s one terrorist or 1000 victims, maybe it has to be one terrorist.’ It becomes even greyer if you THINK this person is part of a terrorist network but have no cast iron proof.

  Shades of grey, stonedwolf. Shades of grey…….

• stonedwolf

  There is no point fantasising about “ticking bomb” scenarios from really old, bad, Dennis Hopper or Tommy Lee Jones films, because Muslim suicide bombers don’t plant bombs and run away… the strap them to their chests and charge at ya!

  Much more tangibly, the inhumane treatment of Muslims has directly contributed to motivating suicide-bombers in Iraq and Afghanistan. There are US soldiers dead today, and others hideously maimed, thanks to these policies.

• walktheotherway

  Bob Diamond’s playing golf with Cameron tomorrow.

• VicTheBrit

  Whack a few balls in his direction for me, will you?

• VicTheBrit

  Thankfully I dumped my Barclays current account 2 years ago after finding Diamond Bob had removed all the interest to pay for his and everyone else’s bonus.

• http://twitter.com/EcoHustler EcoHustler

  Democratizing money should go hand in hand with democratizing everything else including energy and food supply. Local, distributed networks allow for better, more equal access and sidestep the institutional hierarchies which lead to decisions that are very bad for citizens like wars and a failure to act on climate change. Long live the Network! http://www.ecohustler.co.uk/2011/11/04/money-information-energy-and-bullshit/