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
Royal Bank of Scotland (RBS)
Green/Ethical Products
- Carbon offset payments
- Eco-Markets
- Solar Mortgage (through its partner Ulster Bank)
- Basic Bank Accounts (RBS, NatWest, Ulster Bank)
- Microfinance
- Foundation Account (business account available 'regardless' of credit standing)
Ethical Lending or Insurance
While the bank does not have a broad group-wide ethical policy it does have guidelines on the following:
• Global lending and project finance for corporate customers (i.e. the Equator Principles are applied in project finance decisions)
• Ethical Code for Suppliers in line with the UN Global Compact principles (human rights)
The bank's Sustainability Team manages all Corporate Responsibilities at executive level, including assessments of social and environmental impacts of the lending policy.
Responsible Lending
1. Credit Lending
RBS offers LTV (loan-to-value) mortgage rates up to 90%, comparing 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. However, the bank states that the 90% figure does not imply that higher LTV products may not be offered under certain circumstances.
The LTI (loan-to-income) rate is not specified. The bank states that it uses an affordability assessment in making loan decisions but information on the factors considered or limits imposed are not made publicly available.
RBS runs credit checks on mortgage and personal loan applicants. These checks are based on information supplied by both the applicant and by requesting information from credit reference agencies. Similarly credit card customers are subject to credit scoring based on information provided on application, credit reference information and any existing or past account performance with the bank.
The bank does not have a policy to avoid making unsolicited increases to customers’ credit limits.
2. Debt Warning
The bank issues a generic warning to mortgage customers: ‘Your home may be repossessed if you do not keep up repayments on your mortgage.’
For credit card customers it states: ‘All introductory offers are conditional on you paying on time and staying within your credit limit.’
Though it does not refer customers directly to the FSA’s Debt Test, the RBS MoneySense website features a debt test that 'helps you find out whether you have - or are likely to have - problems with borrowing'.
3. Debt Management and Advice
With regard to mortgage customers experiencing difficulty making their repayments the bank says it will:
- Contact the customer ‘as soon as possible’ to discuss their problem
- Talk to debt advice agencies (e.g. Citizens’ Advice) and will act on the customers behalf if requested
- Give customers ‘reasonable time’ to pay back the debt
- Look at arranging a new payment plan with mortgage customers
- Consider changing the way the customer makes their payments or the date they are made
- Consider allowing the customer to pay back their mortgage over a longer period of time, thus reducing monthly payments
- Look at changing the type of mortgage
The bank also outlines the steps involved if they move to repossess the customer’s home. No similar assistance was found for customers with difficulties related to unsecured credit.
Evidence indicates RBS offers payment holidays to mortgage customers, however there is no policy statement and circumstances are not outlined.
The bank states that it has a ‘suite’ of policies to assist customers experiencing financial difficulties but does not disclose specific details, i.e. whether payment holidays or restructured payments may be possible.
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
RBS states that it is the top provider of basic bank accounts in the UK with a 31% share, while the RBS Financial Inclusion Innovation Fund provides grants to voluntary and charitable organisations including the Royal National Institute for the Blind, Citizens Advice Bureau and Credit Unions.
RBS also works with Scotcash, a Community Development Finance Institution offering support to people in Glasgow who are otherwise excluded from financial services.
In terms of access provisions, the RBS Group has designed accounts to meet specific language needs with a strong focus upon the Polish population in the UK and mobile banking are offered to customers in some remote areas.
RBS is involved in microfinance projects in India.
The bank states that it lent £517m to SMEs in the 5% most deprived wards in the UK in 2007.
Environment
According to its Corporate Responsibility report however, the RBS Group obtained all its UK and Ireland contracted electricity from renewable sources in 2007 and has made a significant investment in improving its energy efficiency and has show an ongoing commitment to the improvement of its environment performance specifically where it concerns energy efficiency and reducing carbon emissions.
However, similar commitments regarding waste management were not found.
Carbon Neutral
The bank’s stated goal is to reduce carbon emissions per employee in the UK and Ireland by 20% from 2006 levels by 2011. No pledge was found to become fully carbon neutral.
Equal Opportunities
The Group’s diversity policy addresses the key areas of gender, race, disability and sexuality.
Women on the Board
The figure of 5.88% women on the board is reported for 2007.
Charitable Giving
RBS donated 0.38% of its pre-tax profits in 2007.
Royal Bank of Scotland (RBS)
- Current Accounts
- Savings
- Investments
- Credit Cards
- Loans
- Mortgages
- Insurance (Home, Motor, Travel, Life, Income Protection)
- Student Current Account
- Student Contents Insurance
Royal Bank of Scotland (RBS)
Royal Bank of Scotland (RBS)
36 St Andrew Square
Edinburgh
EH2 2YB
