Do you know where your money goes?

Do you know what your bank does with the savings you entrust to it? Have you ever even wondered?

Recent research shows that 30% of bank customers admit having no idea what their bank is doing with their money. Amazingly, one in three customers believe their bank would simply add occasional interest to their savings or just lock the money away in a vault. Only four in 10 of us are aware that our money may be lent out to a range of companies and organisations, and just 45 per cent of us recognise it may be used to fund banks’ investments elsewhere.

How banks put your money to work

Money does not stay still, it is passed around the global system, being lent and invested. This activity seems a far cry from handing over hard-earned cash at a local bank branch for safe-keeping.  But the fact is that, once out of your hands, your money enters a system which is far from transparent. High Street banks’ lending and investment decisions could see your savings helping to fund businesses and organisations you do not approve of – for example, tobacco firms, arms manufacturers, undemocratic regimes, businesses with appalling records on pollution. The list goes on…

Of course, these same banks also support ethical businesses, and individuals – the problem is that in today’s interconnected global financial marketplace you cannot be sure that your savings are not doing harm.

You won’t be surprised that there aren’t a lot of ‘ethical banks’ around. Some simply screen out negative impact businesses and organisations from their lending and investments, while at Triodos they only invest in positive impact businesses and organisations.

Of course it would be naïve to expect the big banks to adopt this level of transparency any time soon;, but surely any step towards better transparency on lending and investment decisions, using your money, would be a step towards empowering savers.

Consumer choice

Increasingly, British consumers want to know how the products they buy are sourced and produced, from fishing to clothing to coffee.  If as a consumer you take an interest in, for example, how the food you eat reaches your plate, and make purchase decisions based on this, why not also challenge and understand how the money system works?

Ask your bank how they are using your savings, and ask them whether they lend to or invest in areas you may disagree with, be it arms, polluting companies, tobacco firms, or undemocratic regimes. Show that you are interested, show that you need them to be accountable to you, their savers, on ethical issues, in just the same way as many other big companies now are to their customers.

And if they can’t or won’t answer, or you don’t like what you hear, why not make your voice heard and move your savings to an ethical bank that can, and will.

Huw Davies is Head of Personal Banking at ethical and sustainable bank Triodos

You can see all the places where Triodos puts savers money at www.knowwhereyourmoneygoes.co.uk.