To many savers, being able to deposit cash with a provider that will use your money in a socially and ethically responsible way is extremely important – but where do you start?
Since the financial crisis and particularly during this extended period of low savings rates, scrutiny of banks and how they go about their business has come into the spotlight. This has led many people to question exactly where their money goes and if that fits with their own ethical values.
However, ethics and high returns do not always go hand in hand sadly – though they aren’t mutually exclusive and there are options out there for savers who want their money invested in an ethical way.
Of course, as soon as we go into the whole area of ethics, we find ourselves in a tricky area of subjective judgements and personal choice. What may be an ethical investment to one person could be completely different to another. Some may place environmental issues above all else, whereas others are more concerned about problems affecting society and communities.
But there are areas that we can all agree on and there are the overtly ethical providers – those with a clear ethical and socially responsible mission statement. The providers that come under this banner are Triodos Bank, Ecology Building Society, Charity Bank and The Co-operative Bank (although you could say that The Co-op’s reputation has been dented over the last few years).
These providers’ clear ethical stances should be commended and those looking to put money somewhere that is doing some good may like to investigate further. But the one piece missing from the jigsaw is best buy rates, which is where a compromise will need to be made – to maximise your return or choose an ethical provider.
This is where alternatives that you may not have considered before may come into play. For example, did you know that providers that offer Sharia compliant accounts have to follow Sharia law, which prohibits investment in companies involved in unethical activities, such as gambling, alcohol, tobacco or pornography.
So, an ethical stance is in-built as part of these providers’ make-up – and crucially for savers, the returns on offer are competitive in today’s savings market.
Two of the main competitors in this market at this time are BLME and Al Rayan Bank – occupying all five positions in our dedicated sharia fixed term accounts best buy table.
BLME holds the top spot with its five year Premier Deposit Account, paying 2.70% gross/AER*.
If you’re looking for shorter terms, Al Rayan is paying 2.40% gross/AER for three years and BLME pays 2.05% gross/AER for one year*.
Al Rayan Bank leads the way with its fixed term cash ISAs, paying 1.60% tax free/AER on its one year account and 1.80% tax free/AER for two years.
- For further information, please refer to our recent article for more on sharia accounts and how they work.
The final group of providers to consider are building societies or other mutuals – these institutions are owned by their members and are answerable to them, rather than shareholders - as is the case with banks.
Many would argue that these lines have been blurred in recent years, with some of the bigger building societies acting more like big banks in cutting rates and offering lower returns. But on the whole, these providers are treating their customers more fairly than the big high street names and tend to be more community focused, serving their local customers first and foremost.
So, sometimes savers face a choice between higher returns and the knowledge that the money they deposit is being used to help a good cause or society as a whole.
Investment into good causes and helping society can be done, money does not have to be invested in areas like fossil fuels or tobacco, for example, for a company to succeed.
The important thing is to make sure that we are all more aware of where our money goes and we should all remember that we are in control of where our money is placed.
If you do not like the ethical stance of your current provider, switch to one that matches your own values. Ultimately, there are providers out there that are doing good things, helping society and supporting good causes – food for thought and another angle to consider when looking at your savings options.
If you need any further help with finding the accounts that are most suitable for your needs, please call us on 0800 011 9705 to speak to one of our expert savings specialists.
Last week was Good Money Week, which raises awareness of sustainable, responsible and ethical finance, to help people to make good money choices with their banking, pensions savings and investments.
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