Sound ethics - shame about the hard sell

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The Independent Online
Financial products that have ethical connections - a growing fashion (believe it or not) - are not always being marketed ethically.

Some weeks ago I got on my moral high horse in this column about the new Earth Saver account, launched by Triodos Bank (profiled left) and Friends of the Earth, for the implication that savers stood to make more money from switching to it. Deposits will only be lent to renewable energy and energy conservation projects. All very worthy, but the interest rates are in fact pretty mediocre.

Now it's Amnesty International, the human rights campaigner, which is one of the few charities and pressure groups I am normally inclined to support unequivocally. I am one of the 120,000 "Amnesty supporters" who have just received mailshots on an offer headed "ethical tax-free savings for all the family". It being from Amnesty, I was less inclined than usual to bin this piece of financial junk mail.

Called the Charity Bond, it is variously described as a "flexible way of saving totally tax-free", "an excellent tax-free savings opportunity" and as carrying low charges.

The heady cocktail of ethical credentials combines donations to Amnesty from the firm managing the money, an investment policy that will avoid companies involved in the arms trade and countries with poor human rights' records, and the recommendation of the independent financial advice arm of Co-operative bank, which has an ethical lending stance.

If you invest, Amnesty gets a one-off pounds 5 and then 0.25 per cent of the value your bond each year - which could total perhaps as much as another pounds 50 over the 10-year investment term, assuming you invest the maximum pounds 25 a month.

But the overall financial deal looks less attractive than the mailshot's hype. The bond has pretty much the same tax breaks as a PEP but it carries higher charges and is less flexible. Cash it in within a year and you will lose all the money you invested. Even under projections from Family Assurance, the firm managing the money, you would have to invest for five years before you could cash in for more than you invested. After 10 years of putting in pounds 25 a month - a total of pounds 3,000 - you might get back just over pounds 4,000, an uninspiring profit of just one-third on the money put in.

No doubt some Amnesty supporters will sign up. And that the bond is not such a great financial deal might not be that much of a blow. In addition it could be argued that the promotional bumpf is no worse than that from a normal financial company and, that given the worthy links, an even harder sell might have been justifiable. But others may question whether the hard sell of such offers doesn't threaten to dilute the pressure group's stock of goodwill.

If you want to support Amnesty through your savings here are my suggestions. You could invest in an ethical PEP and then donate some of the hopefully higher profits to Amnesty tax-efficiently (there are three schemes that offer tax-relief on donations: Give As You Earn, Gift Aid or a covenant - talk to your tax office). Or you could try Amnesty's credit card, run by the Co-operative Bank, which will benefit the pressure group without having to cost you a penny. The bank gives a pounds 5 donation to Amnesty for each card issued as well as 0.25 per cent of the value of all purchases. So long as you use the card 12 times a year - hardly an onerous commitment - there is no annual fee and, as with other credit cards, you pay no interest if you pay off your bill in full at the end of the month.

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