If we’re not happy with a product or service, we’ll complain or shop elsewhere. If we disagree with a company’s actions or policies, we’ll boycott it. Why then, do we do nothing about our banks? We all feel let down by the banks in this country. Bankers are the new estate agents. However, we can’t rely on politicians and regulators to do anything but maintain the status quo.
The Move Your Money campaign is encouraging us all to make a positive decision about where to put our money. It’s easy to think that British citizens wield little power in this arena, but banks are reliant on the deposits of ordinary savers. So the decision about where you choose to keep your money is a powerful one. You can opt to support an ethical and socially useful bank, and send a message about the sort of society and economy you want to see, and at the same time withdraw your financial support of the banking institutions that have wreaked havoc for so long.
There’s a wide range of alternative financial providers that you can move your money to, from household names like Nationwide and the Co-operative Bank through to local credit unions and community development finance institutions. When you’re making the decision to leave your bank, think about what kind of account you are going to need. Will you just want a current account or do you want somewhere for savings too? Opening a new cash ISA (Individual Savings Account) is one of the easiest ways to move your money. If you’re a saver, then you have only a few days left – until April 5th – to make the most of your ISA allowance for the current tax year. While you are on the hunt for the best cash isa 2012, remember that ISAs can be ethical too; you can find an provider that will invest your money in socially and environmentally responsible ways
by looking on the Move Your Money website. The benefits of these accounts are that some offer higher rates than ordinary savings accounts, and the interest earned is free of income-tax.
Access to your money is also something to consider. Is it important to have a branch nearby or can you bank online? Essex Savers, a financial co-operative which anyone living or working in Essex can join, has over 25 face-to-face access points running weekly acrossEssex. Long-term, they plan to have access points in every Essex library and to extend into rural areas.
Credit unions like Essex Savers are a serious ethical alternative to a high street bank. They are co-operatives which provide banking services (mainly savings and loans – but some also offer current accounts) and are owned and run by members. Since they are owned by members, ordinary people have real influence in the way they’re run. Every member has one vote.
One of the particular benefits of a credit union is that all the money the bank gives out will go to the local community, so your deposits will help people in your local community. Investing in a credit union can be viewed as an ethical act as it gives members of the community who might otherwise go to loan sharks or high cost lenders, a real alternative. Credit unions lend out most of their savings to other members. The remainder is invested into short-term savings, often (but not always) with ethical banks. This model tends to make credit unions very stable, compared with big banks which adopt a more speculative and high-risk approach.
Due to the lack of external shareholders demanding high profits, credit unions can provide cheaper loans and more attractive rates for savers. This contrasts starkly with the big high-street banks, where pressure to generate dividends for shareholders leads to mis-selling of financial products to customers.
A further difference is that managers at credit unions are usually paid a standard salary, without the lavish bonuses and other rewards of their counterparts in high-street banks. The board comprises elected members, sitting voluntarily and for no salary.
The security of savings and the access to affordable credit that are offered by credit unions brings a number of social and economic benefits, not only to the individual, but also to the wider community. The Rent Direct Account offered by Essex Savers, for example, which receives housing benefit to pay the landlord, and the Budget account, enabling members to receive wages/ salary, welfare benefits and make bill payments, are likely to reduce debts like rent and council tax. This in turn reduces debt recovery actions and court costs. Fewer repossessions due to the credit union helping people organise ad budget for their rent payments will mean a potential saving of over £5 million for Essex.
Financial worries are among the topics most likely to cause arguments between couples, resulting in relationship breakdown and mental health issues. Any long-term, stable, socially responsible approach to alleviating money problems has to be a good thing for the whole community, bringing stability to relationships and households, cutting stress-related hospital and GP visits, and reducing the need for welfare benefits and extra housing brought about by marital breakdown.
All this can be achieved for your community and it starts with the simple step of putting your money where your mouth is.
Guest post written by Isabella, thank you.