The Move Your Money Bank Ranking Scorecard
December 1, 2014
At Move Your Money we believe that the financial system should serve the interests of people and planet before itself, and that a financially engaged, educated and active citizenry is key to achieving this aim.
But what would a financial system that serves people and planet actually look like? What activities and structures shape a financial institution’s impact on society, and how can we track a bank’s improvements or otherwise?
In September 2013 Move Your Money released our Bank Ranking Scorecard to answer some of these questions. After conducting a nationally representative survey, we found that the areas of banking that mattered most to the public were Honesty, Customer Service, Culture, Impact on the Real Economy and Ethics.
Working in conjunction with our research partners Ethical Consumer, Move Your Money created a transparent methodology to measure the activities of UK-based financial institutions in these areas. We used publicly available data across 26 metrics, predominantly drawn from the banks’ own annual reports. Our indicators were designed to be proportionate, robust, and comparable, and we took appropriate steps to avoid undue bias in our comparisons.
Our scorecard was covered over 100 times in the mainstream media, and to date remains the only bank ranking system that uses public, open, and quantifiable methodology to assess the sustainable and ethical credentials of financial institutions.
Below is a summary of our methodology and an explanation of the different areas included in the scorecard. You can view our full methodology here, and our final results table of all 72 financial institutions included in the scorecard here.
The banking crisis has destroyed public trust in Britain’s banks, and a slew of scandals since have only served to underline the feeling that the banking sector serves its own interests at the expense of everybody else’s.
Our honesty category examines the general conduct of a financial institution, and looks at whether they have:
- Received fines for criminal activities, like rigging markets or money laundering
- A record of using recognised tax havens and tax avoidance structures
- Lobbied against effective change in the banking sector
- Ever been punished for faulty or misleading advertising
Financial institutions play a critical role in our daily lives, as well as in the wider economy. We rely on them to provide current account services so we can pay for the inevitable costs of getting things done, and to live and thrive in a modern society. Their ability to lend credit is also crucial to providing jobs and opportunities for individuals and businesses.
But banks also rely on our custom for their businesses to survive. As a result, the way they treat us is important not only as a paying customer, but also in relation to our own individual experiences. Our customer service category looks at:
- How many complaints the financial institution receives, relative to their number of customers
- Whether they mis-sold PPI and other complex financial products
- How often the Financial Ombudsman Service is called in to settle complaints disputes
- The performance of the organisation in Which? customer satisfaction surveys
In the aftermath of the banking crisis, many analysts asked whether the male-dominated, extortionately paid and bonus-fuelled financial sector was culturally disposed to taking excessive risks with our money. Despite playing such a central role in our societies, relying on our custom to operate, and needing unprecedented tax-payer handouts to avoid total collapse, many financial institutions also remain completely impervious to public and customer accountability.
As a result, our metrics on the culture of a banking institution examine:
- How much power the organisations customers or members have in influencing its policies
- Whether directors’ pay is disproportionate, excessive, or unreasonably high
- The bonus culture at the organisation, which includes all forms of “variable remuneration” such as shares, deferred payments, and “long-term incentive schemes”
- The proportion of women on the board of the organisation
Banks and building societies developed from the need for saving and lending functions for people and businesses. While most still provide these services, the modern financial industry increasingly creates and lends money for itself, creating ever expanding risk without producing tangible or real-world value.
Our supporting the real economy category assesses:
- Whether the organisation endangers the very stability of the entire system by remaining too big to fail
- The amount of risky behaviour the organisation is involved with through disproportionate use of speculative financial derivatives
- What proportion of the organisation’s assets support the real economy, by providing real people and businesses with finance, rather than other banks and the financial markets
The final area of our scorecard addresses the most common-sense understanding of a financial organisation’s ethical impact on our world – what businesses, practices and activities they actively choose to financially support.
Using Ethical Consumer’s Ethiscore, our ethics metrics look at a financial organisation’s impact in a number of areas, including:
- Financing fossil fuel extraction and climate change
- Investment in unethical industries such as arms & weaponry, industrial food production, and animal testing
- Respect for human and workers rights
- Sustainability policies and positive investment
The performance of financial institutions in each category was standardised into three simple categories – best, middle and worst – and given a numerical score out of 20. Each bank’s category scores were then combined to form a mark out of 100%.
We have described this as the bank’s overall Switch Score, and it determines their final position on the Move Your Money Bank Ranking Scorecard. This helps people quickly and easily compare banks and building societies on a range of measures, to help them decide on the best place to move their money.
We’ll be updating our scorecard in the near future to take into account new market entrants, changes in bank investments and activities, and to refine our methodology after having received feedback from the public and the financial industry.
We’ll also be updating our website to house our scorecard in a more accessible format. In the mean time, you can view our full methodology and scorecard at the following links: