If you want to live ethically, start with your bank account

Moving your money is an opportunity to make the banking system as a whole better, writes Co-operatives UK's Ed Mayo.

Do you have a bank account? If so, congratulations. You have a vote in what kind of economy the UK has moving forward.

This week is National Ethical Investment Week, an event which over recent years has become a great way to celebrate the mix of green and ethical funds open to those with the money to invest.

A bank account isn't usually considered as a classic investment product. But if we are going to improve the ethics of the world of finance, it is a good place to start.

To begin with, any money you have in your account is invested by your bank. It is not an investment that you see, but for every pound on deposit, your bank can lend a multiple of this in the wider economy. Taken together, as UK consumers, our bank accounts have money in credit at the end of a typical day of around £100bn.

A number of current accounts do now pay direct interest for the money you hold, even if it is still only a small proportion of conventional accounts that pay more than 0.5 per cent interest.

But there is another reason to consider where you hold your bank account, because it is the building block for the wider financial services sector. We can't complain that banks are less than fully ethical if we don't ourselves consider ethics when we choose who to bank with.

Current accounts are a cash cow for the big banks. One way or another, they make £152 out of every bank account they have. This is more than they earn from savings and credit cards put together. 

Current accounts are also something that most people have a choice over. There are 64 million bank accounts in the UK. So, where only around 15% of people are investors in the sense of putting money into stocks, shares and pooled funds, 90 per cent of us have a bank account and can have a say through our money.

The Move Your Money campaign has emerged this year as a cause célèbre. Launched in February 2012, the campaign calls on people to switch their account, current or savings, away from shareholder banks that helped to cause the economic crisis, and towards co-operative and mutual banks, such as credit unions and building societies.

Because they are not owned by external shareholders, they can put the interests of their customers first. Worldwide, customer-owned banks have been far safer than shareholder and state-owned banks over the last five years. No less importantly, your money is reinvested locally rather than going into the global carousel of bonuses and high finance. If you switch banks to an ethical bank, your money is being used for good – so it is not just fair to you but fair to others.

Since the campaign launched, around half a million people have switched accounts. The UK had long been the country with the lowest switching rate in Europe. More than the actions of any regulator, the Move Your Money campaign, in tune with the times, has changed that. And it is still early days.

Madeleine is one I know of many that have switched to the Co-operative Bank in recent months. "The online banking is different, but it all meets my needs and the switching was pretty simple." The switching process is far smoother than people may fear. You ask your new bank to set it in train and within 10 days of the application being approved, all your standing orders and arrangements should be transferred and up and running. 

Sandra has switched to Nationwide, one of fifty building societies still operating in the UK. She found that "banks are only interested if you have a lot of money and, as pensioners we don’t have a lot. But Nationwide was different. I know they want your money, I’m not saying they don’t, but they have more time for you, to explain the ins and outs."

Credit unions, which are financial co-operatives for savings and loans, are also among the providers that have benefited from switching as the larger credit unions now offer current accounts or debit cards that give access to ATM networks.

Ethical Investment should not just be about feeling good or having something to talk about at a dinner party but changing the way the financial system works. The call to move your money is a genuine and positive opportunity to make the banking system as a whole better.

Make it the one thing that you do this week.

Ed Mayo is Secretary General of Co-operatives UK

The Move Your Money campaign outside a Barclays. Photograph: Getty Images

Ed Mayo is Secretary General of Co-operatives UK

Photo: Getty
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The Prevent strategy needs a rethink, not a rebrand

A bad policy by any other name is still a bad policy.

Yesterday the Home Affairs Select Committee published its report on radicalization in the UK. While the focus of the coverage has been on its claim that social media companies like Facebook, Twitter and YouTube are “consciously failing” to combat the promotion of terrorism and extremism, it also reported on Prevent. The report rightly engages with criticism of Prevent, acknowledging how it has affected the Muslim community and calling for it to become more transparent:

“The concerns about Prevent amongst the communities most affected by it must be addressed. Otherwise it will continue to be viewed with suspicion by many, and by some as “toxic”… The government must be more transparent about what it is doing on the Prevent strategy, including by publicising its engagement activities, and providing updates on outcomes, through an easily accessible online portal.”

While this acknowledgement is good news, it is hard to see how real change will occur. As I have written previously, as Prevent has become more entrenched in British society, it has also become more secretive. For example, in August 2013, I lodged FOI requests to designated Prevent priority areas, asking for the most up-to-date Prevent funding information, including what projects received funding and details of any project engaging specifically with far-right extremism. I lodged almost identical requests between 2008 and 2009, all of which were successful. All but one of the 2013 requests were denied.

This denial is significant. Before the 2011 review, the Prevent strategy distributed money to help local authorities fight violent extremism and in doing so identified priority areas based solely on demographics. Any local authority with a Muslim population of at least five per cent was automatically given Prevent funding. The 2011 review pledged to end this. It further promised to expand Prevent to include far-right extremism and stop its use in community cohesion projects. Through these FOI requests I was trying to find out whether or not the 2011 pledges had been met. But with the blanket denial of information, I was left in the dark.

It is telling that the report’s concerns with Prevent are not new and have in fact been highlighted in several reports by the same Home Affairs Select Committee, as well as numerous reports by NGOs. But nothing has changed. In fact, the only change proposed by the report is to give Prevent a new name: Engage. But the problem was never the name. Prevent relies on the premise that terrorism and extremism are inherently connected with Islam, and until this is changed, it will continue to be at best counter-productive, and at worst, deeply discriminatory.

In his evidence to the committee, David Anderson, the independent ombudsman of terrorism legislation, has called for an independent review of the Prevent strategy. This would be a start. However, more is required. What is needed is a radical new approach to counter-terrorism and counter-extremism, one that targets all forms of extremism and that does not stigmatise or stereotype those affected.

Such an approach has been pioneered in the Danish town of Aarhus. Faced with increased numbers of youngsters leaving Aarhus for Syria, police officers made it clear that those who had travelled to Syria were welcome to come home, where they would receive help with going back to school, finding a place to live and whatever else was necessary for them to find their way back to Danish society.  Known as the ‘Aarhus model’, this approach focuses on inclusion, mentorship and non-criminalisation. It is the opposite of Prevent, which has from its very start framed British Muslims as a particularly deviant suspect community.

We need to change the narrative of counter-terrorism in the UK, but a narrative is not changed by a new title. Just as a rose by any other name would smell as sweet, a bad policy by any other name is still a bad policy. While the Home Affairs Select Committee concern about Prevent is welcomed, real action is needed. This will involve actually engaging with the Muslim community, listening to their concerns and not dismissing them as misunderstandings. It will require serious investigation of the damages caused by new Prevent statutory duty, something which the report does acknowledge as a concern.  Finally, real action on Prevent in particular, but extremism in general, will require developing a wide-ranging counter-extremism strategy that directly engages with far-right extremism. This has been notably absent from today’s report, even though far-right extremism is on the rise. After all, far-right extremists make up half of all counter-radicalization referrals in Yorkshire, and 30 per cent of the caseload in the east Midlands.

It will also require changing the way we think about those who are radicalized. The Aarhus model proves that such a change is possible. Radicalization is indeed a real problem, one imagines it will be even more so considering the country’s flagship counter-radicalization strategy remains problematic and ineffective. In the end, Prevent may be renamed a thousand times, but unless real effort is put in actually changing the strategy, it will remain toxic. 

Dr Maria Norris works at London School of Economics and Political Science. She tweets as @MariaWNorris.