Your Money: Savers pay for principles

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The Independent Online
Friends of the Earth got into the financial advice business this week. It urged savers to move their money into a new account run by a bank that lends solely to projects with social and environmental value. Funds raised by the Earth Saver Account, run by Bristol-based Triodos Bank, will be used to provide loans for renewable energy and energy conservation projects. "Saving with Triodos Bank's Earth Saver account makes sound environmental and financial sense," went its endorsement. All very worthy, but what ruffles my feathers is the implication that you stand to make more money by switching to this account.

The claim that you will not pay for your principles comes up a lot in the world of ethical finance, and it is not always justifiable or believable.

In this case, rates range up to 5.5 per cent gross, but to earn this top rate you would need to tie up at least pounds 25,000 on six months' notice or pounds 100,000 on 33 days' notice. On a typical nest-egg of pounds 5,000 you would get 3.5 per cent from what is effectively a postal account, 4 per cent on 33 days' notice or 4.5 per cent on 6 months' notice. These are not particularly good rates. Some are OK and, yes, some people are in worse accounts. It may even prove the case that the bank will hold its rates when other savings institutions cut theirs. I am not holding my breath, however.

Another example of the claim that having a conscience doesn't have to cost came this week from Friends Provident, the insurance company with Quaker roots that specialises in ethical investment management. It runs a range of investment funds that avoid companies involved in the arms trade, for example, or that are big polluters. Celebrating the fact that three of its funds had been going for 12 years, the insurer cited above- average performance records. I am not disputing this. But I would question why the company hasn't included in its announcement that it is significantly increasing the charges on these funds. High charges do not preclude good performance in the future, but they are a handicap.

There are examples wheresavers do not have to pay for principles. Take affinity credit cards, where the issuer makes donations to a charity when you sign up and spend. One for the Prince's Trust will be launched this week and promoted at Saturday's Masters of Music concert. The card costs nothing if you pay the balance each month.

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