Move Your Money (to a Mutual)

One way to chip away at the power and influence of the big banks is to simply withdraw your financial support. Move your money to a bank that has a better business model or ethics. But to whom?

The ideal option would be a true full-reserve banking: a bank that doesn’t promise you instant access to your money even though it’s lent it to somebody in sub-prime America, and one that doesn’t use fractional-reserve banking to devalue the currency and pile excessive debt upon the public. Unfortunately, until later in 2011 (more later), there is no UK bank that operates on this principle.

However, there are 49 ‘mutuals’, or building societies in the UK. Unlike normal high-street banks, mutuals redistribute their profits to members – members being the savers and borrowers. So rather than the interest you pay going towards the £7billion bonus round, or to the Qatari royal family (in the case of Barclays), it’ll be going back to other members of the public who share your bank.

Even better, building societies are prohibited by law from engaging in commodities or foreign exchange trading. So if you give your money to Nationwide or Coventry Building Society, they won’t use it to push up the price of food to the point where people in developing countries starve. That’s a nice thought!

Building societies must also make sure that at least 75% of their lending goes into residential property (i.e. mortgages), so you’re far less likely to find that that your bank has exploded due to some toxic investments.

Here’s a list of mutuals in the UK, along with the number of branches of the first few.

Nationwide Building Society (~750 branches)
Coventry Building Society (~91 branches)

Cooperative 

Triodos

Charity Bank

ZOPA

Ecology Building Society

Nationwide and Coventry offer current accounts with debit cards (like any normal bank) and will transfer your direct debits and other payments from your other account automatically. Both have UK call centres. (I have used Nationwide for the last 9 years and have never had any reason to complain).

Yorkshire Building Society (~200 branches)
Skipton Building Society (~89 branches)
Leeds Building Society (~70 branches)

Yorkshire, Skipton and Leeds building societies don’t offer accounts with debit cards, so it’s savings and mortgages only. But regardless, the interest you pay will only go to the staff and fellow customers of the building society, rather than shareholders. Likewise, the interest the building society earns by investing your hard-earned savings will be split between you and the staff of the bank, rather than between you, the staff, and short-term dividend-hungry shareholders.

A list of more localised mutuals is available at Wikipedia. Have a look for one close to you.