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
Lloyds TSB
Green/Ethical Products
- Basic Bank Account
- Islamic Financial Services
- Community finance
- Socially Responsible Investment Funds (through Scottish Windows)
Ethical Lending or Insurance
No evidence was found of an ethical lending policy.
Responsible Lending
1. Credit Lending
All Lloyds TSB branded mortgages are administered by partner bank Cheltenham & Gloucester (C&G). Lloyds TSB/C&G offers LTV (loan-to-value) rates up to 90%, matching the suggestions of the FSA’s Turner Review that borrowers should have at least a 10% deposit for a mortgage.
Lloyds also offers a ‘Lend a Hand’ mortgage for first time buyers with an LTV of 95%.
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 single applicant.
The bank states that it uses credit reference agencies in all cases to make lending decisions for mortgages, personal loans, credit cards and overdrafts and that it will also use an internal check where there is an existing relationship with the customer.
There is no policy to avoid or prevent offering unsolicited increases in credit limits to customers. The bank states that customers can request limit decreases or that no further increases are given.
2. Debt Warning
The bank has a statement that ‘borrowing sensibly’ will help preserve a good credit rating. It also runs a generic repossession warning for mortgage customers.
Additionally the bank’s pre-contract agreement for personal loans carries the following warning: ‘Missing payments could have severe consequences and make obtaining credit more difficult’. It also outlines the rights of both borrower and lender under the Consumer Credit Act (1974).
The bank provides a link to the FSA’s Money Made Clear website in its section on debt advice, though does not explicitly link to the FSA’s Debt Test tool or an equivalent.
However, the C&G ‘Am I Eligible?’ page provides tools for customers to calculate their borrowing and repayment amounts and terms which carries a generic repossession warning at the end.
3. Debt Management and Advice
With regard to secured loans (mortgages) the bank recommends that customers seek free debt advice and provides links to organisations and websites including Consumer Direct, Citizens Advice Bureau, the FSA’s Money Made Clear website and the National Debtline.
The bank also states that it will:
- Allow customers a ‘reasonable period of time’ to pay back their debt
- Talk to an agency which gives debt advice, for example the Citizens Advice Bureau, if the customer requests it
- Offer to send a debt counsellor to discuss the customer’s financial circumstances and add the fee for same to the mortgage account
- Attempt to arrange a new payment plan
- Offer to change the method the customer makes their payments by or the date they make them
- Consider extending the mortgage time period, thus reducing monthly payments
- Consider a change in mortgage type to reduce monthly repayments
Further to this the bank outlines the steps leading up to repossession of property/court action.
Short, free-of-charge payment holidays are offered to customers who have made regular overpayments. Those who have not been overpaying may still be eligible for a break but will incur a charge and must have already made 12 monthly payments.
With regard to unsecured loans the bank outlines ‘steps to take to pay off debt’. Amongst these steps is a reference to the bank’s ‘Debt Remedy Tool’ which provides customers with an assessment of their circumstances and access to expert advice, anonymous and free of charge. Financial ‘Health Checks’ are offered to existing customers at branch level.
The bank states that if it repossesses a customer’s home it will give them advice about getting in touch with their local authority to find somewhere else to live. 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 bank offers a basic account to low-income customers.
A number of Lloyds TSB ATMs have been made accessible to disabled customers. The bank has also partnered with the Post Office to allow Lloyds TSB’s personal customers access banking services at around 14,500 post offices. Hearing induction loops are available within all branches while British Sign Language (BSL) interpreters can be called upon for extra assistance in some cases. Typetalk is also available.
Lloyds TSB has been involved in microfinance projects on both a commercial and semi-commercial basis, providing capital for loan funds which are on-loaned to business start-ups, micro-businesses and social enterprises.
The bank's Public and Community Sector team within Corporate Banking states that it is one of the largest funders of the social housing sector in the UK with £6bn committed in 2007. The bank also works in partnership with community-based organisations in the SME sector.
However, no evidence was found of partnerships with credit unions or similar organisations.
Environment
The bank’s environment policy addresses the issue of energy efficiency and waste management. It is also subject to continuous assessment under which targets and achievements will be monitored.
Carbon Neutral
The bank states its goal is to reduce its operational carbon emissions by 30% by 2012 but no pledge for total neutrality was found.
Equal Opportunities
The banks equality policy addresses the key issues of gender, race, disability and sexuality.
Women on the Board
14.28% of board members are women (2007).
Voluntary Standards & Initiatives
Lloyds TSB is a signatory/member of a number of charters and initiatives including:
Charitable Giving
An average of 1% of pre-tax profits was donated to charity over three years (ending 2007).
Lloyds TSB
- Current Accounts
- Savings
- Investments
- Credit Cards
- Loans
- Mortgages
- Insurance (Home, Motor, Travel, Pet)
- Student Current Account
- Student Credit Card
- Student Contents Insurance
