Ethical Banking

An important decision for me when I was setting up Planet Minimal was to ensure that our money would be handled by a bank that was working to be as transparent and ethical in its operations as possible. It was harder than I thought - not because there aren’t good options out there, but because finding the right balance between functionality of an account (including geographical location of branches), the account fees working for us and the highest level of ethics possible was a little bit of a challenge. In the end, I opted for Metro Bank - not the very top of Ethical Consumer’s rankings, but not far off it either. Some of the more attractive features being that they have a genuinely personal service and are open 7 days a week (practically unheard of in the banking sector!) It’s true that the need to actually visit a physical location is rare in banking these days, but it’s reassuring to know it’s an option, especially with a business account. They also have a very reasonable fee structure, including waiving monthly fees if the account balance remains above a certain level.

Metro Bank - high street branches that are open 7 days a week

Metro Bank - high street branches that are open 7 days a week

For a business like Planet Minimal, we felt that founding our principles on being as low impact as possible would be devalued by choosing partners that did not share our values, so the choice of bank was particularly high on the agenda, ruling out pretty much every large traditional high street bank at the first stroke! Some of them have truly jaw-dropping skeletons in their closets and it is worth doing some research (Netflix’s documentary on HSBC in their Dirty Money series is as good a starting point as any) if you are interested in voting with your feet and helping to encourage the banking sector to change its ways. It’s easy to make a very quick and positive change, with minimal disruption, thanks to smart legislation that has made switching accounts a straightforward process, and this applies equally to business and personal accounts, of course.

Amongst the worst of the failings of the big banks is something that is an increasingly hot topic - the use of tax havens to avoid tax - while not technically illegal, this is a big ethical black mark, and more needs to be done to shut it down for the benefit of all.

In 2011, ActionAid released a report showing that o‍‍‍f the UK’s biggest companies listed on the London Stock Exchange, the banking and financial sector were by far the heaviest users of tax havens. The ‘Big Four’ High Street banks – HSBC, Barclays, Lloyds Group and RBS had a total of 1,649 tax haven subsidiaries between them. One of the main reasons companies use tax havens is for Corporate tax avoidance, which has a far-reaching impact on developing and developed countries which then lack funds for essential services like healthcare and education
— The Good Shopping Guide

ActionAid are a great resource for keeping up to date on this issue, as they regularly make official announcements responding to reports with findings on the subject of tax havens. This article from last year shows that sadly there hasn’t been as much progress as there could have been since their 2011 report - and the big four banks are still amongst the worst of the perpetrators.

This played a big part in our selection of Metro Bank PLC:

In March 2018, Ethical Consumer viewed the family tree for Metro Bank on the corporate database, which listed the company’s subsidiaries. It did not appear to have any subsidiaries registered in tax havens and therefore received Ethical Consumer’s best rating for likely use of tax avoidance strategies
— Ethical Consumer

Metro Bank first started trading in 2010, so is a relatively new addition to the market. Their status as a challenger bank has influenced their decision to make a point of difference out of founding their operations on ethical principles, so it will be interesting to observe how the sector evolves. There are a good number of challenger banks hitting the market and doing their bit to upset the status quo - Monzo is another great example that is scoring highly in the ethics stakes and is rapidly gaining popularity as a personal banking option, especially among the younger generations. There’s a good sense that a shift is happening and long may that continue!

Hamish Ainsley