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
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Bank of Ireland (UK)
Green/Ethical Products
- Basic Bank Account
- Alburaq product range (Shariah)
- Giraffe Carbon Offset mortgage (online product)
Ethical Lending or Insurance
No evidence of a policy found. The Alburaq product range does apply principles of Shariah law, however.
Responsible Lending
1. Credit Lending
Bank of Ireland offers a standard 90% LTV (loan-to-value) rate for house purchase/re-mortgage. This compares favourably with the FSA’s recent Turner Review which suggests that LTV (loan-to-value) rates be set at 90%, i.e. that borrowers should have at least a 10% deposit for a mortgage. The bank offers 92% LTV for first time buyers.
The bank also offers a 4.5 times LTI (loan-to-income) rate to single borrowers, 4 times for joint borrowers (or 4.5 plus 1) while the Turner Review suggests just 3.5 times.
In terms of running credit checks, the bank states that it does an assessment to determine how much customers can afford to borrow and the most appropriate type of borrowing. It looks at income and financial commitments and the customer’s financial history as well as information from credit reference agencies and a ‘credit score’. The credit score works out the risk of defaulting on repayments. It also takes into consideration what security the customer can provide.
No policy was found related to the avoidance of unrequested increases in credit limits.
2. Debt Warning
The bank requires customers to read its ‘Personal Banking Guide’ before buying a product – this includes details of credit checks, warns about careful budgeting and recommends payment protection plans to help against unforeseen financial difficulties.
Customers in Northern Ireland are given a warning about home repossession resulting from failed repayments on mortgages or other secured loans.
No warnings were found on the consequences of failing to make payments on unsecured loans. No evidence that the bank avails of the FSA Debt Test was found either. This facility is designed to help customers find out whether they have, or are likely to have, problems with borrowing. It also has tips on what to do if customers find themselves in difficulties.
3. Debt Management and Advice
Options offered to customers experience difficulty making payments include possible regular or fixed repayments for debts, reducing or suspending repayments for a set time.’
The bank refers customers to free advice services including the Citizens Advice Bureau and the Consumer Credit Counselling Service (CCCS).
The bank states that it offers up to two payment breaks per year (up to two months) on personal loans (unsecured). It further states that payment free month(s) must be selected prior to completion of a loan and that the monthly repayment amount will increase as a consequence. No similar service was found for secured loans (mortgages).
Similarly, no information was found regarding re-housing advice or liaison with organisations such as Shelter and the Citizens Advice Bureau to work out re-housing arrangements with mortgage customers facing repossession. The bank does not outline the steps leading up to repossession of property/court action.
Financial Exclusion
The bank offers a basic bank account to low income customers.
In terms of access for potentially excluded groups, Bank of Ireland has made the following provisions:
- Migrant Worker Initiative - translation of 10 key product/service brochures and welcome pack on account opening in foreign languages such as Polish, Russian and Chinese
- Polish Telephone Line - advice on all products and services to Polish-speaking customers
Environment
Bank of Ireland’s policy addresses the key areas of energy efficiency and waste management. An environmental management system is in place to monitor and improve performance.
Carbon Neutral
No pledge to make business operations carbon neutral was found.
Equal Opportunities
No evidence of policy found with regard to gender, race or sexuality. However, the bank reports that it employs people with disabilities. Its Customer Operations has a long track record of recruiting people with a disability and in recognition of this was awarded the 'Overall O2 Ability Award Best Practice - Private Sector' Company in 2006.
Women on the Board
According to figures from 2008, 13.3% of board members are women.
Voluntary Standards & Initiatives
Bank of Ireland (UK)
UK:
- Business and Corporate Banking
Northern Ireland:
- Current Accounts
- Savings
- Credit Cards
- Investments
- Mortgages
- Insurance (Home)
- Student Current Account
Bank of Ireland (UK)
Bank of Ireland (GB)
Customer Care
Bow Bells House
1 Bread Street
London
EC4M 9BE
