Should we move our money?

There was a time when banking seemed boring. Bowler hats and bow ties. Men in pinstripe suits who looked like chartered accountants, but not as glamorous. How times have changed. Fred Goodwin, Bob Diamond and Stephen Hester may not be The Who, but nobody is accusing them of being boring.

Depending on which reports you read, public opinion about banks and bankers ranges from a lack of trust to outright hate. The reasons are manifold. Our current economic woes can be traced back to the 2008 banking crisis. Bankers’ bonuses seem to soar, regardless of success or failure, while the rest of us tighten our belts. Accusations of money laundering for terrorists and drug cartels face one bank, while another is found guilty of illegally fi xing the Libor interest rate. Computer glitches leave countless people stranded without money for weeks. There are running battles with the Financial Services Authority over treatment of customers. As a result, Fred, Bob, Stephen and others have become poster-boys for Britain’s fastest-growing sport in an Olympic year: banker-bashing.

Something Went Wrong

But is demonising banks fair? More importantly, is there any point to it? After all, whatever we may think about the big banks that have dominated our headlines of late, we need them and are stuck with them. Or are we? A growing movement of activists, faith groups, charities and ‘ethical banks’ don’t think we are. So, should we move our money? Is it possible? Is it safe? And are there good reasons to do so?

‘Banking is a biblical principle,’ says Jeremy Marshall, chief executive of Britain’s oldest private banking house, C Hoare and Co. ‘Lord Jesus used the parable of the talents to make a spiritual point, but the parable also points out that banks have a useful role in collecting savings and paying interest.’ But Marshall, also a trustee of Christianity Explored, says that ‘greed is good’ has become a creed for some bankers. ‘The banking industry, which used to be a byword for probity and indeed philanthropy, has gone badly wrong,’ he says. ‘Banking culture has lost its moral bearings, and needs to be reformed.’ Marshall is in good company with that view.

‘What I hope is that everyone now understands that something went very wrong with the UK banking industry, and we now need to put it right,’ is how the governor of the Bank of England, Sir Mervyn King assessed the state of UK banks in June this year. ‘From excessive levels of compensation, to shoddy treatment of customers, to deceitful manipulation of one of the most important interest rates, we can see that we need a real change in the culture of the industry.’ Prime Minister David Cameron agreed with King’s stinging criticism, calling the need for a change of culture ‘vitally important’.

Ethical Alternatives

But how do you create a change of culture in an industry that many of us don’t understand, and few of us have any influence over? The answer may lie in a phenomenon long championed by Christians: the fair trade movement.

There was a time when the idea of buying fair trade seemed radical. It took years to convince people that changing the way they used their money could help change the world. And yet, today everyone from supermarkets to Nestlé recognise the power of ethical spending.

So, what does that have to do with banking? ‘A lot of people think you put your money in a savings account and it sits there,’ says Rob Carr, communications manager at the Christian Socialist Movement (CSM). ‘That’s not the case. A bank makes its money by investing that money. That’s how they earn the money to pay you interest, by reinvesting money in various markets.’ By depositing with a bank, we all lend our banks money and they invest or lend it out.

Since Barclays was fined £290m after being found guilty of illegally ‘fixing’ the Libor interest rate, many Christians will no doubt be concerned about lending their money to a bank that is willing to break the law. But just as making non-fair trade chocolate is not illegal, so there are many ways in which banks can behave unethically without breaking the law. ‘There has been evidence of British banks investing in quite unsavoury businesses,’ says Carr. ‘If you were choosing to buy shares, you probably wouldn’t choose to buy shares in these businesses. And that’s something people need to examine a bit more closely.’

CSM is currently running a campaign called Put Your Money Where Your Mouth Is to get Christians to move their money from large banks to more ethical alternatives. ‘We have to be a prophetic voice in all walks of life,’ says Carr, ‘We can’t really pick and choose to be a good witness in our daily lives but not in our banking and our financial lives.’

For about a year, CSM has been campaigning for the separation of high risk investment (or ‘casino’) banking from more traditional banking operations. To begin with, very few figures from either the Conservative or Labour parties would have openly called for such a radical measure. This year, chancellor George Osborne brought legislation doing just what they called for into being. ‘We were seen as being out there on the fringe,’ says Carr.

‘It’s interesting to see how the wheel has turned.’

Move Your Money

But it’s not just the CSM or indeed prophetically minded Christians calling for people to consider the ethics of their financial arrangements. A campaign called Move Your Money has been making waves across Britain since it launched in early 2012. Started by campaigner Danielle Paffard, Move Your Money seeks to encourage people to move their capital from big banks into local, mutual or ethical alternatives.

‘The banking system has failed us,’ says Paffard. ‘It’s very easy to pick out individuals like Bob Diamond, and bankers with big bonuses, and target them, but they are very symptomatic of a system that is rotten to its core and is so obsessed with its absolute pursuit of profit that it behaves in ways that undermine its future existence.’ Paffard points to large banks’ habit of collapsing, their investment in oppressive regimes, their bonus and tax avoidance culture, and the funding of some of the most environmentally destructive projects on earth as reasons to move one’s money. ‘Your deposit will be used to invest in these things,’ she says.

That alternatives to the ‘big five’ banks (Barclays, HSBC, RBS, Lloyds and Santander) even exist may come as a surprise to many of us. ‘There are a lot more alternatives in the UK than people realise,’ says Paffard. ‘There are a whole range of ethical banks which have ethical policies and mission statements. Banks like Triodos, Charity Bank, Co-op Bank or Unity Trust.’

Building societies and other mutual societies are preferable to banks, according to Paffard, because they offer members more control and transparency about where their money is used. ‘That’s very important in terms of being able to make sure your money isn’t being used to invest in dictators.’ Paffard also favours local banks and credit unions. ‘Investing in these kinds of institutions is how we’re going to build the banking sector that cares for society and is a useful tool rather than [an] exploitative force,’ she says.

The Move Your Money campaign has been gaining momentum over the last few months, aided by public anger at new banking scandals. With support from both CSM and the minister for civil society, Conservative MP Nick Hurd, the movement toward sustainable, local and ethical banking may be one of the best examples we’ve seen of ‘the big society’ in action.

And if individuals have a responsibility to invest ethically, so do organisations such as churches. ‘Any organisation that is depositing money with a financial institution is effectively lending that institution their money, so they need to make sure they are lending that money to an institution [that] shares their values,’ says Nathan Whitaker, a Christian and relationship manager for Charity and Social Enterprise Banking at the Co-operative Bank. ‘We don’t do any business at all with organisations in the arms industry or certain forms of oil extraction we consider to be unethical, and we don’t support organisations that do cosmetic testing on animals,’ he says. ‘We believe there is a purpose beyond profit. The bank’s purpose is also to add value to society.’

Voted Europe’s most sustainable bank three years running by The Financial Times, the Co-op bank’s secret is that its ethical policy is not an add-on, but core to what the bank does. ‘Corporate social responsibility is normally a department of a bank,’ says Whitaker. ‘The whole ethos of the Co-operative is corporate social responsibility.’ The Co-op bank’s ethical policy is decided by its members, effectively its customers, because unlike most banks, it does not have any shareholders. ‘Shareholders’ concerns are always profit-driven, and we’re not looking to please shareholders,’ says Whitaker.
Salt and Light?

But even if we move our money to ethical alternatives, what of the thousands of Christians employed in the banking sector? ‘Some of the things that we read about in the press can be quite hurtful to a banker with integrity,’ says Whitaker. ‘That can be quite hard for a Christian.’ But he believes there is a place for Christians to work in the banking industry: ‘As a Christian, you’re called to be a good steward of finance and you can add a lot of value to organisations because of your integrity and honesty. If you see it as your calling to serve in a bank in that way, I think you can make a difference.’

‘I think the important thing is to stay there and to be a good witness,’ agrees Carr. ‘If Christians walked away from all the places where there was immorality and problems, would the immorality and problems get any better?’

But if Christian bankers should stay where they are to be salt and light to the industry, should we as banking customers really be behaving any differently? ‘For too long Christians have often been affected by a sacred/secular divide, and have avoided thinking through the implications of our faith for our finance,’ says Marshall. ‘What that means is up to each Christian to decide, but we have a choice.’

In many ways, staying with one of the big banks is the harder choice, if we are going to be guided by our faith and conscience. Bigger banks are harder to influence, but influence them we can, if we are willing to make the effort. Certainly, moving our money to a more ethical alternative is simpler than attending shareholder meetings or writing endless letters about ethics to Barclays or HSBC. Ultimately, it is a choice each one of us must make.

For Christians, the choice is not between moving our money or doing nothing. We either change banks or change the banks we’re with. Whichever we choose, we have the power and responsibility to change the world.