Sustainable banking/saving/borrowing

9th Jan 2015

There are some good guys in the banking world, including local ones:

Congleton Community Credit Union

Our local ‘bank’ isn’t legally speaking a bank, but you can save money with them regularly or occasionally and then borrow an amount at a very low interest rate. Credit unions are designed to save people from credit loan sharks and unscrupulous payday loan companies who charge crippling interest rates, so spread the word.

Credit Unions can only loan money they have – no virtual cash here – so saving some of your money with the local credit union, even if you don’t want a loan, means your money goes into their kitty to help out someone else who does need to borrow.

When anyone saves money, they become a shareholder, and their money is protected. Shareholders have a vote at the AGM, where, amongst other things, the interest paid on savings is decided (but again, this is limited by the money held by the credit union).  The only flaw that we can see is that credit unions have to bank the cash somewhere, and this credit union currently uses Barclays.  As we understand it, this is partly history and partly because the credit union is obliged to give the best return possible to its shareholders.  The AGM is the time and place to put forward a motion to either alter that part of the constitution (if that is even possible), or to switch to a more ethical bank.

More info: You can phone Denis (Chair) on 07799 887091 or Graham (Treasurer) on 07504 184902 for info (but their phones may be on voicemail, so be prepared to leave a message) or you can chat with someone (and join) at the collection point on Saturday mornings 10-11am in their office below the library (entrance by the bus station).

Ethical Banks and Building Societies:

You might not receive the top rate of interest, but you have to consider at what cost (to individuals and the country) those big banks are able to offer higher interest rates.  If you can find the Bank of Dave channel 4 TV programmes on 4oD catchup (there are 3 episodes), you’ll get a good idea.  Dave set up his own ‘bank’ (he’s not allowed to call it a bank) to feed local money into local businesses and wants this model to spread to every town in the country.

The building societies that have retained their traditional mutual status, only lending for housing, and only having savers as shareholders, offer an ethical solution to banking (especially convenient if they offer cheque book and debit card facilities, with online banking too) and saving.  Mutuals include the Nationwide BS, the Ecology BS and other national or local institutions.  View the best of the bunch via the online and print magazine, Ethical Consumer, which has some public information about the ethics of those building societies and banks offering savings accounts – for in-depth detail you have to subscribe.

Money Saving Expert also produces a frequently updated online guide to best current accounts, saving accounts and ISAs, and includes a comparison section for the best ethical institutions, using Ethical Consumer’s data.

Triodos Bank is one such ethical bank, but is a Dutch institution, so UK savers are not protected by the UK guarantee scheme but by that of the Netherlands, which covers eligible UK depositors up to €100,000 (or twice this for joint accounts; the link also explains which accounts are eligible).  However, they also state on their website that “We only finance companies, institutions and projects that benefit people, society or the environment. 

We maintain a strong, sustainable financial position.We do not lend out more than we have on deposit, nor do we trade in the wholesale money markets. Likewise we do not trade in derivatives or other abstract financial instruments. We have not invested in sub-prime debt. Our capital and liquidity is significantly above that of the majority of banks operating in the UK and Europe.

So, the chances that you will ever have cause to revert to the deposit guarantee scheme are remote.”

Charity Bank is another ethical bank that states on its website that it “…finances social enterprises, charities and community organisations, with the support of depositors and investors who want to use their money to facilitate real social change, while earning a financial return.”

Steps towards a locally resilient and future-proof Congleton