Student Finance Overview
If you buy Fairtrade goods, believe in human rights, or are concerned about climate change -
- put your money where your mouth is and open an ethical bank account too.
Financial institutions make all sorts of offers to get students through their doors, from discounts to vouchers to bags of freebies. But these short-term gestures can mask long-term issues.
How would you feel if your money was being used to prop up oppressive regimes, test cosmetics on animals or damage the environment?
What are the issues?
Before you open a new student bank account, or if you want to find out about your current bank’s green and ethical credentials, you should consider the following:
Lending
Banks don't just lend money to current account-holding customers, they also lend to large corporations, public institutions and even governments. Would you approve if your bank was lending money to a company with a poor track record on human rights or one manufacturing arms for use in war zones?
Climate Change and Environment
Financial institutions 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 or insurance provider 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?
Equal Opportunities
A lot of people believe that equal opportunity in the work place is now the norm, but there is still a massive pay gap between men and women doing the same jobs across most industries, including finance. Also the number of women in high level positions is still significantly lower. Not only that but some companies’ equal opportunities policies don’t take other key issues like sexuality and disability into consideration.
Financial Exclusion
There are an estimated two million adults 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.
Responsible Credit
Does your bank, credit card provider or insurance company take care to appropriately target and market its products? Does it offer assistance to customers in financial difficulty? Some credit card providers may not treat their customers responsibly – issuing cards to people who’ll struggle to make their repayments and not offering help to those who do fall behind.
What are the ethical options?
There are a few banks, building societies and insurance companies with well-recognised green and ethical credentials. The examples listed below for banking and saving also scored the highest marks on ethical lending in our research:
Banking
- The Co-operative Bank: this institution provides student banking, insurance and credit cards facilities and has an ethical lending policy that extends across all its business operations.
- Smile: this internet arm of the Co-operative Bank and also offers student accounts.
Saving
- Triodos: this bank offers green and ethical savings accounts. Its commercial lending is primary to green businesses.
- Ecology: this mutual building society offers a range of green savings accounts and mortgage options and its commercial lending is mainly to small, green businesses.
Insurance
- Co-operative Insurance
Insurance type: home, motor, life and health
This company offers a wide range of insurance products and has an extensive ethical engagement policy governing who it will provide cover to. - Climate Sure
Insurance type: travel
Climate Sure calculates the CO2 produced by flying overseas and pays for it to be 'offset' by funding sustainable energy projects. - Green Insurance Company
Insurance type: motor
This provider aims to offset your car's carbon emissions and offers discounts on greener cars/lower mileage. - Naturesave
Insurance types: home, travel, personal accident and illness insurance
This company puts 10% of its personal insurance premiums in a fund (Naturesave Trust) to benefit environmental and conservation projects. It also offers a free environmental performance review for commercial clients and aims to use suppliers that support sustainable business practices.
Credit Cards
Before signing up to a card you should check out the ethical credentials of its provider. Visit our credit card section for more information.
Your next steps
See our Next Steps Guide - Student Finance for information on finding the best green and ethical service provider for you, how to switch accounts and how contact your bank or insurance company about their policies.
Student Finance Search
Abbey
Green/Ethical Products
- Green Loan
- Basic Bank Account
Ethical Lending or Insurance
While Abbey does not have a formal ethical lending policy it states that it screens lending on a case-by-case basis and takes special care when:
- There are concerns about adherence to international human rights treaties and protocols
- Companies or projects are operating in the defence sector
- Activities pose a high degree of risk to the environment
- Activities could have a negative impact on public health
No information was provided or found as to how these guidelines are monitored or who advises on lending.
Responsible Lending
1. Credit Lending
Abbey offers LTV (loan-to-value) mortgage rates of up to 90%. These compare favourably with the FSA’s Turner Review suggestion of a maximum LTV of 90%, i.e. the borrower should have at least a 10% deposit.
Specific figures for LTI (loan-to-income) rates for UK customers were not found.
In assessing applications for credit cards the bank uses both a credit scoring system based on information supplied by the applicant and account information already held by the bank, as well as information obtained from a credit reference agency. It is unclear whether this checking system applies to personal loan applicants too.
The bank may make unrequested increases to a customer’s credit limit and inform them in writing.
2. Debt Warning
The bank issues the generic warning to its mortgage customers: ‘Your home may be at risk if you do not keep up repayments on your mortgage.’
No warnings were found about the consequences of falling behind on payments on unsecured loans or credit cards.
The bank does not refer customers to the FSA’s Debt Test or an equivalent test. This test aims to help customers find out whether you have, or are likely to have, problems with borrowing.
3. Debt Management and Advice
The bank’s ‘Self Help Information for Customers with Financial Difficulties' refers customers to different internal advice lines depending on the credit product. It also lists independent advice providers. The document covers areas including budgeting, litigation, repossession and how credit ratings and the ability to obtain credit in the future may be affected.
It does not outline what the bank itself might do to help customers, e.g. restructuring payments. Payment holidays are available on ‘flexible’ mortgages, though the circumstances under which they are given are not outlined. No information was found with regard to customers with difficulties making their credit card payments, nor do payment holidays appear to be available to personal loan customers.
No evidence was found that the bank offers re-housing advice or liaises with organisations such as Shelter and the Citizens Advice Bureau to work out re-housing arrangements with mortgage customers facing repossession.
Financial Exclusion
Abbey offers a basic bank account to low-income customers.
In 2006 it also developed its Affordable Credit Fund which supports initiatives run by credit unions, community development finance institutions and other organisations that provide access to relatively small loans at reasonable interest rates. The fund made donations totalling £150,000 in 2007 and supported five affordable credit projects.
Abbey provides some of its literature in alternative formats for customers with hearing or sight difficulties.
The bank is not involved in either microfinance projects or preferential lending to disadvantaged communities.
Environment
Abbey’s environment policy incorporates the key criteria of energy efficiency and waste management. Its policy also explicitly states a commitment to continuous improvement of the bank’s environmental performance.
Carbon Neutral
No pledges were found to make business operations carbon neutral for either Abbey or its parent company, Santander.
Equal Opportunities
Abbey's policy addresses the four key areas of gender, race, disability and sexuality.
Women on the Board
Figures from 2007 state that just over 9% of the bank’s board members were women.
Voluntary Standards & Initiatives
Abbey is a signatory/member of:
- Employers’ Forum on Age
- Employers’ Forum on Disability
- Opportunity Now
- Race for Opportunity
- Stonewall Diversity Champions Programme
Parent company Santander:
Charitable Giving
Abbey donated 0.31% of its pre-tax profits in 2007.
Abbey
- Current Accounts
- Savings
- Investments
- Credit Cards
- Loans
- Mortgages
- Pensions
- Insurance (Home, Motor, Personal Protection)
- Student Current Account
Abbey
Abbey
Abbey National House
2 Triton Square
Regent's Place
London
NW1 3AN
