The collapse of the sale of 630 Lloyds TSB branches, 180 of them in Scotland, to the Co-operative Bank has underlined just how difficult it is to follow the campaign advice and move your money from the big banks – even if you want to.
Now ethical bank Triodos is considering entering the current account market. The Dutch firm offers decent Isa rates, and has just launched a range of ethical investment funds. But it may join Tesco and the Post Office as the new alternative providers of full-range banking in what is a narrow market with relatively little choice – especially in Scotland.
Charles Middleton, UK managing director of Triodos, says: "We are in the process of having a serious hard look at a current account. Operationally and financially, it is a very big decision, but potentially an exciting one."
Triodos has just made its socially responsible investment (SRI) funds available in the UK, adding another option for those attracted to its ethical stance. The Sustainable Pioneer Fund and Sustainable Equity Fund will also be available within a Triodos Ethical Stocks and Shares Isa.
The bank's cash Isa pays 2%, with 33 days' notice, though that does include a 0.25% bonus for six months, or 2.15% on 90 days' notice with a 0.4% bonus and no earlier access.
Middleton says Triodos has been reaping the rewards of disillusionment with the big banks. It also offers more sophisticated investors higher-risk opportunities, such as the bond issue for Golden Lane Housing, a subsidiary of the Royal Mencap Society, which has been offering a 4% return but which was so well supported that it is now closed to anyone with less than £84,000 to invest.
"We are not looking for the sympathy vote," Middleton says. "But we are interested in promoting what we offer in terms of the breadth of return you can get."
Many Triodos customers, he says, organise their lives around sustainability but many simply "want to do a bit more in that area with their finance".
Savers can see where their money goes – for instance in supporting the refurbishment of six studio properties across Scotland for Wasps, one of Scotland's largest arts organisations. Triodos grew its Scottish deposits by 28% to £50 million last year, 10% of the UK total, and its lending by 18%. On the banking market, Middleton says: "With all the rhetoric there is about wanting to see more competition, the reality is that the odds are stacked against new entrants."
Now the Post Office is set to join the battle, with a new current account. However, it will be available only in limited post offices this year, with a wider roll-out in 2014. Meanwhile, Tesco Bank is about to launch a current account, and Sainsbury's – which this week announced it was taking full control of its bank from Lloyds – is likely to follow close behind. Credit unions are also gearing up to offer a wider range of services.
Among the existing alternatives to banks, the biggest are mutuals Nationwide and the Co-operative, which both claim growing numbers of customers switching from the big players. But the Co-op's withdrawal from the Lloyds deal will disappoint some intending switchers, while Nationwide's heavily advertised new current account offers a 5% savings rate on up to £2500 – but cuts that to 1% after 12 months, which equates to a joining bonus of a maximum £125. The Halifax has reopened its £100 offer to switchers, available only online to anyone in Scotland.
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