What’s more fun than bank bashing? Bank switching

By Ed Mayo, Secretary General of Co-operatives UK

We’ve been bashing the banks since the start of the crisis. With the start of Move your Money month today and the publication of a new guide, the "little book of money", bank switching is a viable and vital alternative.

When banks are owned by shareholders there is always pressure to put the interests of outside investors first, using depositors' money for example in more risky ways than they should or selling products that profit the bank at the expense of their customers.

This is not new. It has long been recognised and is the reason why we have banking regulation - and have had it for hundreds of years.

But over the last thirty years, banks have campaigned vigorously to cut back on regulation and they have created new financial products and accounting devices that sidestep regulators who have simply failed to keep up.

As a result, we have twin scandals that stem directly from the way that banks are owned and run, as night follows day.

The first is the scandal of failed loans packaged and sold between banks that brought on the credit crunch.

The second, less well recognised perhaps, is the ongoing tally of consumer misselling, taking advantage of the fact that, compared to buying a toaster or even a car, it can be hard to judge the value of a financial product because it is complex and because it takes time to know.

The best estimate we have of the total cost to UK consumers of these scandals (from misselling personal pensions and payment protection insurance through to punitive charges on current accounts and overdrafts) is £32 billion over the last five years - money which has gone straight from ordinary customers to banks' executives and shareholders.

With these issues coming to a head over the last few years, it’s not surprising we’ve been bashing the banks.

But what we are starting to remember now is that there is another way to bank. Co-operative and mutual banks are owned by, run by and accountable to their members - everyday people, not outside shareholders. Following the co-operative principle of democracy in business, they operate on the basis of one member, one vote rather than one pound, one vote.

They are right across the country – from big high street names such as The Co-operative Bank and Nationwide to local community based credit unions.

Today, post credit crunch, these models are as relevant as ever, not least to give consumers a choice when the herd of PLC and state-owned banks look and feel the same.

People have been gradually moving over to these banks, with the mutual sector as a whole having grown by 33% since the start of the credit crunch.

But if we want to create a better banking system, we need more people to understand this way of banking and move their money.

So it’s great to see the grassroots Move your Money campaign launching Move your Money month today, to encourage people across the country to move their money to local, mutual and ethical banks.

The Move your Money campaign in the US saw tens of thousands of people switching ‘from Wall Street to Main Street’, as more and more people saw that there was a better way of banking.

To support this inspiring initiative in the UK we at Co-operatives UK are publishing the Little Book of Money, a short guide to why you should move your money to a better bank and how.

If you’re fed up with conventional banking and bored with bashing banks, why not switch.

You can download the Little Book of Money here.

You can pledge to move your money here.

Ed Mayo is Secretary General of Co-operatives UK, the trade association for co-operative businesses