Co-operative Bank's future ethical focus leads customers to look around

Co-operative Group says it is committed to preserving bank's policy, while former leader says ethical label no longer applies

Fears that the Co-operative Bank, now controlled by hedge funds, may drop its much-trumpeted ethical policy has prompted some of its 4.7m customers to consider seeking out alternative green and socially responsible financial institutions.

The wider Co-operative Group has said it remains committed to preserving the bank's ethical focus, but the former boss of the wider Co-op Group, Peter Marks, this week told MPs that in his opinion, the ethical label could not apply to the bank any more.

A glance at Twitter and the letters pages of newspapers indicates many customers feel the same way. Last night, an online campaign was launched to "save our bank" and make sure it "sticks to its principles". Using the website saveourbank.coop, the campaign is backed by Ethical Consumer magazine and is appealing to customers to hold fire on switching away. "Sign up to our campaign instead. Then, once we are in our thousands, let's see if they are prepared to listen. We have two big aims: to protect the values and ethics of the bank, and – in time – to help it return to mutual ownership," it states.

Those determined to leave the Co-op Bank, but who do not want to give their money to one of the big four banks, may be pleased to discover there are other ethical options available. However, ethical finance experts pointed out that a lot depends on an individual's personal priorities and areas of concern. One person's absolute no-no issue is another's shrug of the shoulders, which is one of the reasons why it is impossible to provide one-size-fits-all recommendations.

The website of banking campaign group Move Your Money UK gives all the main banks and building societies a "switch score" out of 100 based on assessments of their honesty, customer service, culture, impact on the economy and ethics.

These five categories take in everything from customer satisfaction levels and the number of PPI mis-selling cases to the proportion of women on the board and the use of tax havens. The information used to determine the scores was compiled three months ago by Ethical Consumer.

For current accounts, the top-scoring institution is Carlisle-based Cumberland building society. However, its current accounts are only available to those living within its branch operating area, which rules most people out.

In joint second place is a bank that most people have probably never heard of: Reliance Bank, originally known as the Salvation Army Bank. Reliance offers a range of products including a fee-free current account that comes with a Visa debit card, cheque book and paying-in book, and offers all the usual facilities – online and phone banking, the ability to set up direct debits and standing orders, monthly statements and so on. But the "Sally Army" connection will not be to everyone's taste. The bank says: "Our investments are made within strict ethical boundaries, and our profits are used to further the Salvation Army's evangelical and charitable work."

Building societies such as Nationwide and the Coventry feature heavily in the Move Your Money list, as does Metro Bank – a relatively new arrival with branches in the London and M25 area; Handelsbanken, the UK arm of the Swedish bank of the same name, and the Islamic Bank of Britain, which calls itself the UK's only wholly sharia compliant retail bank but is keen to strees it is "an inclusive, ethical organisation, and welcomes customers of all faiths".

For those looking for a new home for their savings, the choice is wider, as there are several ethical institutions that don't offer current accounts but do have a choice of savings accounts. In the savings category, Ecology building society took Move Your Money's top spot with a score of 100 out of 100. Based in Keighley, West Yorkshire, the society uses the money put into its savings accounts to offer sustainable mortgages for properties and projects that respect the environment – but because the society has in recent months been inundated with people looking to move their money to a more ethical institution, there is now only one account open to non-member individual savers: Foundations Share, paying 1%.

Meanwhile, Charity Bank lends only to charities, social enterprises and community organisations. It closed its ethical cash Isa to new customers in April 2013 "due to unprecedented levels of new savings," but has other accounts, including one aimed at under-16s which pays 2%.

As things currently stand, the Co-op Bank is still the only high street bank with a clearly articulated ethical policy covering a range of issues, from human rights and the arms trade to genetic modification and animal welfare. Euan Sutherland, the boss of the Co-operative Group, which spans supermarkets, grocers and funeral homes, insisted that the ethical stance will be more ingrained in the bank than in the past.

"This bank will remain the Co-operative Bank. We are embedding the Co-operative principals in the constitution of the bank to guarantee this," he said.

The formal ethical policy was first launched in 1992 and it is signed by the bank's values and principles committee, chaired by a Co-operative Group board member, Herbert Daybell, a retired publisher.

As a result of the policy, the bank turns away £100m of business a year – a test of its ethical stance in the future perhaps.

Article Source : http://www.guardian.co.uk

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