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
Yorkshire Bank
Green/Ethical Products
- Basic Bank Account (Readycash)
- Personal insurance for terminal/critical illness and disability
Ethical Lending or Insurance
Parent company National Australia Bank (NAB) has a policy not to finance the arms trade, whether it is conventional arms (including landmines or any equipment designed to be used as an instrument of torture) or nuclear, chemical, biological or other weapons of mass destruction. It has similar policies in regard to tobacco, pornography and animal testing. NAB has internal credit policies on the environmental impact of its lending and signed the UN Environmental Programme for Financial Institutions, which outlines criteria for investment in developing countries. In 2007 NAB has become a signatory to the revised Equator Principles which provide criteria for lending to large project finance initiatives.
Responsible Lending
1. Credit Lending
The Yorkshire Bank offers an LTV (loan-to-value) mortgage rate of up to 80%. This compares favourably with the FSA’s Turner Review which suggests LTV rates should be no greater than 90%, i.e. that customers should have at least a 10% deposit.
No information on the bank’s LTI (loan-to-income) rate was found. The Turner Review suggests a rate of 3.5 times income for sole applicants.
The bank uses credit scoring to assess loan applications. However, it is not clear if the scoring is based on information submitted by the applicant only or if information from credit reference agencies is included.
No specific information was found as to whether a policy was in place to avoid or prevent offering unrequested increases in credit limits to customers.
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.’ No warnings to unsecured credit customers were found about the consequences of not making repayments on time or running up debts.
Customers are not referred to the FSA Debt Test or equivalent test. This test 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 difficulties.
3. Debt Management and Advice
No policies were found on handling customers who have defaulted on their payments or fallen into financial difficulty. Nor are the steps leading up to repossession or court action outlined.
With regard to payment holidays on secured loans, the bank states that they are available for up to six months on residential mortgages, though it is not specified how a customer might qualify. Payment holidays are not allowed on unsecured loans, though first payments may be deferred until the 14th day in the case of a loan repaid weekly and the 56th day in the case of a loan repaid monthly.
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 re-possession.
Financial Exclusion
The bank offers the Readycash basic bank account to low-income customers.
It provides access services for disabled customers in the form of talking ATMs, documentation in Braille, in-branch provisions and accessible website features.
Environment
A management system is in place to set targets and monitor progress and the bank expresses a commitment to continued improvement of its environmental performance. We could not however find specific details of the policy and the issues it seeks to address i.e. energy efficiency and waste management.
Carbon Neutral
The bank has pledged to make its business operations carbon neutral by 2010.
Equal Opportunities
No reference to employees with disabilities was found in the bank’s equal opportunities policy statement, but the areas of gender, race and sexuality are addressed.
Women on the Board
Figures from 2007 state that 11.1% of board members are women.
Voluntary Standards & Initiatives
Parent company is a signatory/member of:
Charitable Giving
Parent company, NAB reports 0.47% of pre-tax profits were used in community investment in 2007 (includes cash, sponsorship, employee volunteering, management costs, charitable gifts). Cash contributions account for 0.07% of pre-tax profit the same year.
Yorkshire Bank
- Current Accounts
- Savings
- Investments
- Credit Cards
- Loans
- Mortgages
- Insurance (Home, Motor, Life, Critical Illness)
- Student Current Account
Yorkshire Bank
Yorkshire Bank
Customer Engagement
Head Office Complex
4th Floor
51 West George Street
Glasgow
G1 2HL
