Enough is enough, say bank customers as they look for ethical alternatives; PERSONAL FINANCE Jeremy Gates looks at the nation’s money issues and reports on how more consumers appear to be taking their custom to ‘ethical banks’.
ALTHOUGH departing Barclays chief executive Bob Diamond agreed to
limit his pay-off to pounds 2m this week, his dramatic fall seems to be
proving a vital influence in getting people to switch bank accounts.
For years, consumer groups have urged long-suffering bank customers
to take their business elsewhere – with limited effect.
Reports that Diamond awarded himself pounds 120m in pay and bonuses
in seven years – while the share price was hardly impressive – might
have finally done the trick.
Along the high street, new rivals to big banks are sure they can do
a better job. They are boosted by the fact that switching banks is
easier these days, so your new account should be fully operational
within 20 to 30 days.
Since Christmas, website Move Your Money UK
(www.moveyourmoney.org.uk) says that 80,000 savers a month have been
leaving the banking giants.
Meanwhile, Nationwide, Britain’s biggest building society, has
launched a major “On Your Side” campaign, boldly presenting
building societies as the perfect antidote to the big banks. Kevin
Mountford, head of banking at comparison site MoneySupermarket.com,
says: “Without doubt, recent problems in the banking sector have
prompted some bank custom-ers to vote with their feet. We have seen a
25% uplift in the number of searches to the current account
channel.” Nationwide confirms an 85% increase week-on-week in the
number of customers opening and transferring their main account online;
including customers who switch accounts in branch, the society has seen
an overall rise week-on-week of 26%.
, head of current accounts at Nationwide, said:
“The sharp increase in the number of customers switching accounts
to us highlights our commitment to being the challenger brand to the big
banks.” Yorkshire, the second biggest building society with 3.3
million members (540,000 borrowers) and the main brand of Chelsea,
Barnsley and Norwich & Peterborough (N&P) building societies,
confirms a similar surge in current account business.
spokesperson Tanya Jackson says:
“We’re trying to quantify the impact that recent events
(insurance mis-selling, IT problems, the Libor scandal) have had on our
business and customer transaction levels; so far we’ve identified
an increase in branch activity of about 10%.
“There also has been an increase in account openings, with
strong demand for the Triple Access Saver, our traditional passbook
account.” Demand is strong for N&P’s Gold Classic Current
Account: the number of applications doubled in the past week, both
online and in branches.
The Gold Classic account provides free overseas
card that allows the cost of goods or services that are purchased to be deducted directly from the purchaser’s checking account. They can also be used at automated teller machines for withdrawing cash from the user’s checking account.
transactions as standard, which could save almost pounds 12 in the cost
of each withdrawal of pounds 250-worth of local currency in an overseas
ATM compared to other providers.
Other benefits for N&P Gold Classic customers, who must pay in
a minimum of pounds 500 per month, include free cover for cards and keys
worth pounds 32 per year; free pounds 250
for six months
(subject to status); a smooth switching guarantee with possible pounds
50 compensation if things go
1. In a position that is turned or twisted toward one side; askew.
2. Away from the correct course; amiss. See Synonyms at amiss.
; and a single, competitive overdraft
rate (17.9%) for both authorised and unauthorised balances.
Ewan Edwards, head of current accounts at N&P, said: “A
high proportion of the society’s new current account customers have
switched from Barclays and NatWest and we believe this is clearly in
reaction to the recent financial scandals and criticism of the big
banks.” At The Co-operative Bank, with 1.3 million current account
holders, the number of switchers has jumped too; its internet bank,
Smile, shows high customer satisfaction levels.
, head of banking at The Co-operative Bank, said::
“We’ve seen a 61% increase in applications over the last three
weeks and customers appear to be looking for alternatives in the banking
“We’ve had two-and-a-half times more switchers from
“Our customers say that the important things to them are
trust, confidence in their bank, knowledge that they are banking with an
ethical business and also good products and service.”
Even the big supermarkets are looking to take advantage of the big
banks’ weaknesses: Asda, which serves 18 million customers a week,
rebranded its personal finance division this week and introduced a
credit card with a cashback scheme.
Mountford says: “The launch also follows hot on the heels of
Marks & Spencer announcing an in-store banking service from this
summer, backed by
HSBC Humane Society of Bay County
, indicating a wider move by the retail sector to
enter the banking arena.
Michael Ossei, personal finance expert at uSwitch.com, says this is
a key moment on the high street.
“The battle between the high street banks and supermarkets is
going to hot up.
“Other providers such as Nationwide and Co-op are benefiting
too, as people turn their backs on the ‘old’ in search of a
more ethical and simple ‘new’.”
Many customers see ”
” as the answer to
, a European bank with a UK base in Bristol, provides a
range of ethical savings accounts.
It only lends depositors’ money to businesses which have a
positive impact on society and the environment – and says the number of
account applications online soared 51% over the past week.
, Triodos Bank UK managing director, says:
“We are delighted to be welcoming more customers than ever to
Triodos, as people think more consciously about money and its potential
to do good or bad. We expect things to change at a more fundamental
He adds: “If people moved savings away from banks who say very
little about what happens to their money once invested, to banks which
do the opposite and make a virtue of telling depositors how their
savings are used, big UK banks would have to sit up and take notice.
“They would no longer have the financial support to be able to
do things which created the mess they are now in.
“At Triodos Bank, we take pride in doing things differently. A
fair profit, a strong capital base and a stable funding base from
savers’ deposits are key parts of our approach.
“We have no need to engage in the wholesale markets and never
lend out more than we have on deposit. Nor do we use derivatives and
other complex financial instruments, which can put savers’ money at
“At the core of our banking, we are directly connected to the
real economy, only financing sustainable businesses delivering clear
social, environmental and cultural benefits with lasting positive
The Triodos Bank success story has been repeated across the
same as Euroland
n → ,
; after Spain’s banks
The financial rescue of a faltering business or other organization. Government guarantees for loans made to Chrysler Corporation constituted a bailout.
, its Spanish branch doubled
its tally of new customers in a single month.
In two decades, Triodos Bank has grown assets under management to
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]6.8bn, with 22,000 loans offered to sustainable businesses such as
Cafedirect, and Glastonbury’s Worthy Farm.
While Triodos doesn’t yet offer a current account – it would
be too expensive to provide free banking in many cases – it has more
than 350,000 customers in the UK, Netherlands, Spain, Belgium and
Germany. Deposits are covered by European protection, to a limit of
[ETH]100,000. Middleton says: “At last, people can see credible
alternatives to the established financial system. They can get a social
and environmental return on their money – and a decent financial
Mountford adds: “Only move banks for the right reasons. If you
are unhappy, jumping ship is not always the answer.
“It may be better to make the most of products you already
have – by being savvier and not paying over the odds in fees and
“Consumers should review an account regularly to make sure it
suits their financial situation.
“Ultimately, people need different things from current
accounts; those who mainly stay in credit tend usually to find that cash
incentives are the best way to maximise returns, while others should
study overdraft charging structures.
“Those thinking of ditching a bank account altogether after
recent events should think again.
“Having a bank account is essential to gain various benefits.
“Many people struggle to get paid without a bank account, as
most companies use bank transfers rather than cheque or cash in
* Reports that Barclays boss Bob Diamond paid himself pounds 120m
in pay and bonuses in seven years may have encouraged customers to move
to ‘ethical banking’