Banking Overview
How much do you know about your bank? Do you know what type of businesses it lends to?
Does it refuse to lend to companies with poor human rights records, that sell arms or pollute the environment, for example? Does your bank offer services to those on low incomes or the unemployed? And how many women sit on its board?
Such questions often go unasked of the banking sector. But the same caring principles that make you buy Fairtrade goods and recycle household waste can be applied to how you bank too.
Key green and ethical issues to consider
Finding a green or ethical banking option
How banks use your money
The money that you deposit in your current or savings account doesn't just sit there untouched until you require it again - your bank lends it on to others at interest.
Banks don't just lend money to current account-holding customers either, they lend to large corporations, public institutions and even governments.
As many banks are listed on the stock exchange, they are answerable to external shareholders who expect healthy returns on their investments.
While the Treasury hands down some prohibitions as to who banks can and can't do business with, it still leaves them relatively free to engage with companies that you might not approve of and they use your money to do it.
Would you approve if your bank was lending money to heavy polluting industries or even to an oppressive regime?
Key green and ethical issues to consider
Responsible Lending
The recent global economic downturn is often attributed to the 'sub prime crisis'.
Sub prime lending means giving loans to people who are considered to be in higher risk categories - those more likely to default or who have a poor credit history, for example.
This type of lending is not problematic in itself - credit unions and community development finance institutions regularly lend to sub prime candidates. Instead, irresponsible lending to customers in the sub prime category is the problem.
In the build up to the 'crunch' some financial institutions were lending 100% mortgages (and in some cases more) to people who would not be able to make their repayments in the long term.
Lending responsibly shouldn't be limited to just mortgages - it applies to all loans, big and small, and to the provision of credit cards too. Figures from the Bank of England show that UK residents owe £233bn on credit cards, overdrafts and other loans.
Key questions to ask: Does your bank have responsible lending policies that ensure that its products are targeted in an appropriate manner? And does it provide advice or debt management services to customers who fall into financial difficulty?
Climate Change and the Environment
Banks have an impact in these areas, not just in terms of who they lend to or invest in, but how they run their own operations. It is important to find out what your bank is doing to improve its environmental performance as a business: have they pledged to go carbon neutral for example? Or do they offer any green products to their customers?
Financial Exclusion
There are an estimated two million people in the UK without even the most basic bank account. Is your bank doing anything to address this situation?
For more details see our Financial Exclusion section.
Project Finance
In its most basic form, this type of financing is for companies and governments where lenders are repaid through the revenues generated, i.e. the lender has a vested interest in the success of a project.
Common projects receiving finance are petrochemical and chemical plants, power plants, telecommunications and infrastructure. But do lenders ensure that these projects are conducted in a green or ethical way?
Use our search facility to find out about your bank's policy on the environment, ethical lending, responsibility towards its customers, equal opportunities and other issues.
Finding a green or ethical banking option
Building Societies and Credit Unions
Mutual building societies and credit unions are generally smaller, customer-owned operations that primarily lend to individuals and so are less likely to have the same exposure to issues like the arms trade, for example.
Green and Ethical Alternatives
There are a number of banks and building societies with prominent green and ethical credentials. The four examples listed below also scored the highest marks on ethical lending in our research:
- Co-operative Bank: this bank's robust green and ethical policies govern its current accounts, savings and investment products.
- Smile: this internet arm of the Co-operative Bank shares the parent company's ethical policy.
- Triodos Bank: this bank offers green and ethical savings accounts and investments. The bank was established in 1980 in the Netherlands and now has significant operations in the UK.
- Ecology Building Society: this mutual building society offers a range of green savings accounts and mortgage options.
You can use the banking section search to find the banks that perform best against our green and ethical criteria.
Your next steps
What do you do now? Check out our guide Next Steps - Banking for information on how to give your bank account a green and ethical makeover.
Banking Search
 |
 |
 |
 |
 |
 |
 |
 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
 Financial Institution |
Criteria | |||||||||||||||
|
|
|
|
|
|
|
9.09 | |||||||||
|
|
|
|
|
|
|
|
25 | |||||||||
|
|
|
|
|
|
|
|
14 | |||||||||
|
|
|
|
|
|
|
|
13.3 | |||||||||
|
|
|
|
|
|
|
|
25 | |||||||||
|
|
|
|
|
|
|
|
11.76 | |||||||||
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
9.09 | |||||||||
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
11.1 | |||||||||
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
13.3 | |||||||||
|
|
|
|
|
|
|
|
11.1 | |||||||||
|
|
|
|
|
|
|
|
10 | |||||||||
|
|
|
|
|
|
|
|
27.3 | |||||||||
|
|
|
|
|
|
|
|
37.5 | |||||||||
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
10.5 | |||||||||
|
|
|
|
|
|
|
|
14 | |||||||||
|
|
|
|
|
|
|
|
25 | |||||||||
|
|
|
|
|
|
|
|
10.5 | |||||||||
|
|
|
|
|
|
|
|
31.2 | |||||||||
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
27 | |||||||||
|
|
|
|
|
|
|
|
14.28 | |||||||||
|
|
|
|
|
|
|
|
10.5 | |||||||||
|
|
|
|
|
|
|
|
5.88 | |||||||||
|
|
|
|
|
|
|
|
14.3 | |||||||||
|
|
|
|
|
|
|
|
20 | |||||||||
|
|
|
|
|
|
|
|
5.88 | |||||||||
|
|
|
|
|
|
|
|
33 | |||||||||
|
|
|
|
|
|
|
|
10 | |||||||||
|
|
|
|
|
|
|
|
15.4 | |||||||||
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
5.88 | |||||||||
|
|
|
|
|
|
|
|
33 | |||||||||
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
10 | |||||||||
|
|
|
|
|
|
|
|
8.33 | |||||||||
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
30 | |||||||||
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
9.09 | |||||||||
|
|
|
|
|
|
|
|
11.1 | |||||||||
|
|
|
|
|
|
|
|
18.2 | |||||||||
Bank / Building Society Profile
Intelligent Finance
Green/Ethical Products
None
Ethical Lending or Insurance
No evidence of an ethical lending policy.
Responsible Lending
1. Credit Lending
Intelligent Finance offers an LTV (loan-to-value) rate of up to 75%. This compares very favourably with the FSA’s Turner Review suggestion that a maximum of 90% of a property’s price be loaned i.e. that borrowers should have at least a 10% deposit for a mortgage.
The bank does not publish its LTI (loan-to-income) rates, however, for which the Review suggests lending 3.5 times the annual wage of a solo borrower.
The bank applies a credit scoring system which allows it to assess the level of risk associated with a customer’s application. The scoring system incorporates information from credit reference agencies.
The bank no longer offers unsecured credit, for example personal loans and credit cards.
2. Debt Warning
The bank issues a generic warning on repossession which includes information on negative equity.
No information as to whether the bank uses the FSA Debt Test or an equivalent system was found. This facility is designed to help customers find out whether you have, or are likely to have, problems with borrowing. It also has tips on what to do if customers find themselves in difficulty.
3. Debt Management and Advice
The bank does not publicly provide details of any policies it has with regard to payment default and handling payment problems.
Though not fully outlined, the bank states that customers can take two monthly payment holidays each year but not during the first six months, the fixed rate period or the last three years of the mortgage. It further states that interest is still charged along with missed payments and that this is to be repaid over the customer’s remaining term.
No evidence was found that the bank engages with organisations such as Shelter and the Citizens Advice Bureau to work out re-housing arrangements with the customer or on the customer’s behalf.
Financial Exclusion
The only provisions for the financially excluded found are Typetalk and AA-level website accessibility for disabled customers.
Environment
Parent company HBOS’s environment policy applies across the group and covers the key areas of climate change/energy efficiency and waste management. The policy also contains a commitment to continued improvement in performance via an organisation-wide environment management system.
Carbon Neutral
HBOS’s business operations became carbon neutral in 2007.
Equal Opportunities
HBOS’s group-wide policy takes into consideration the key equality issues of race, gender, sexuality and disability.
Women on the Board
No data found.
Voluntary Standards & Initiatives
Not by itself, but the parent company a signatory/member of:
Intelligent Finance
- Current Account
- Mortgage
- Savings
- Insurance (Life, Accident/Sickness/Unemployment, Building and Content)
