Ethical Banks/Accounts

The Co-operative Bank and its online subsidiary (Smile) is the only British high street bank which can guarantee an ethical policy

Features

• Don’t invest or loan to ‘unethical’ organisations
• Actively seek charitable organisations that they wish to do business with
• Donate 1.25p of every £100 spent on visa cards to customer's choice of charity
• An ‘ethical credit card’ is available, with better interest rates for purchases made from ethical partners. Interest rates offered are not particularly competitive with a typical
• APR of 14% and 7% charged for purchases from ethical partners.

Their investment policy is one of the best in terms of ethics, but their credit card seems to play on people’s ethical conscience to cover up a lesser product.

The Co-operative bank has very few branches, but you can bank with the Co-operative via Post Offices which have a vast presence in the UK.

 

HSBC offers a 'green' current account which focuses on being environmentally friendly in terms of paper reduction

Features

• Account holders don’t receive a pay-in book, cheque book or paper based statements
• E-banking is used for monthly statements and consumer marketing
• The bank donates £5 to charity for every account opened and plants one tree for every customer that switches to e-statements

 

Barclays bank has a green credit card called Barclaycard Breath

Features

• 50% of the bank’s net profit (after tax) is donated to projects working to eliminate climate change
• Account holders will only receive e-statements
• Lower interest rate for green purchases (e.g. public transport)

In all other aspects the card’s features are comparable with any credit card.

 

Tridos is an ethical lending specialist bank

Features

• The bank only lends to companies which benefit people or the environment, such as Fairtrade projects and organic farms
• The only account offered in terms of personal banking is a savings account with the majority of its business being aimed at small companies and charities
• There is however no internet banking, 24hour banking or branch network in the UK

 

The Ecology Building Society guides all its decisions on the concept of sustainable development – not making decisions which will be clearly detrimental in the future.

Features

• Specialises in funding properties that have ecological benefits either in the way they are constructed or in the way in which the land is used
• When applying for mortgages, the property must have a green or environmentally friendly effect to qualify
• Offers a saving account with your investment being used to support sustainable development and support more ethical banking

 

Zopa.com is the world’s first lending and borrowing marketplace. It is set up to allow individuals who want to borrow or lend to make use of each other without resorting to the banks. It is more efficient than a traditional bank as there are far less overheads to pay.

As your money is going directly to another person, it cannot be lent to an unethical company or business. In the event of a default, the legality of the contract allows the bank to use the same measures as more traditional banks.

Zopa makes money by charging 0.5% as both a service and transaction fee.
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Islamic Banking

Lloyds TSB was the first British bank to offer an account under Islamic Sharia law believing that consumers should not have to differentiate between cultural loyalty and traditional banking norms.

There are four basic principles which govern the accounts:

• The collection and payment of interest is prohibited. (The ideology of earning money without having to do anything is illegal under Sharia law)
• Only savings accounts earn interest.
• Profits (and losses) are shared between the bank and the customer at a predetermined ratio, as the notion of sharing is one of the founding theories of Sharia law
• Investment in companies that are considered unlawful or 'haraam' is prohibited (eg: companies that sell alcohol or pork - Armaments and tobacco companies are a grey area)

Both Lloyds and HSBC have a range of Islamic compliant services governed by the basic principles of Sharia Law. The Islamic Bank of Britain~ UK’s only standalone, Sharia’a compliant, retail bank.

Islamic accounts should not be chosen for their profit making credentials, as the comparable rates for regular savings accounts is nearly double (6% compared to 2.5-3%). On a more positive note, Islamic accounts do not incur the same bank charges as regular accounts. As the banks can’t profit from the charges, they are kept to a minimum and are simply there to cover the administration charge.

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