Tailored ethical products
and services

Commentary

Context The bank's Ethical Policy stipulates who it will and will not finance, as directed by its customers. In addition, the bank operates a range of more tailored ethical products, as described below. CIS is in the process of developing a customer-mandated Socially Responsible Investment Policy and has established affinity partnerships with a number of non-governmental organisations.

Products and services During 2003 and early 2004, the following products and services were introduced or significantly enhanced:

• Affinity Visa credit cards In October 2003, the bank launched a range of affinity Visa credit cards with Christian Aid. Christian Aid seeks to help people to improve their own lives and tackle the causes of poverty and injustice. The bank makes a donation to Christian Aid when an account is opened and, as with all the bank's affinity Visa credit cards, further donations are made in proportion to the amount spent using the card. A 'generic' affinity Visa credit card was developed in 2002 as a cost-effective way of enabling smaller charities and organisations to receive donations based on the amount spent by their supporters using affinity cards. New generic affinity Visa credit cards launched in 2003 included: Y Care International, the Medical Foundation for the Care of Victims of Torture, the League Against Cruel Sports and the Mothers' Union.
  
• CIS Affinity partnerships In Spring 2003, CIS entered into affinity relationships with RNID - the largest charity representing the nine million deaf and hard of hearing people in the UK - and Mind - the mental health charity, working to improve the lives of people with experience of mental distress - to promote its motor and home insurance to supporters of the two charities. The charities receive a contribution of £20 for each policy sold.
  
• FTSE4Good Tracker Unit Trust In September 2003, CIS launched a FTSE4 Good Tracker Unit Trust - a unit trust fund which 'tracks' the FTSE4Good UK index. To be eligible for inclusion in the FTSE4Good index series, companies need to meet prescribed standards in three areas: environmental sustainability, human rights, and stakeholder relations. The index series excludes companies involved in tobacco, weapons and nuclear power industries. The product aims to provide capital growth over the medium to long term - five years or more. CFS' Chief Executive, Mervyn Pedelty, chairs the FTSE4Good Policy Committee.
  
• smile In May 2003, smile entered into a partnership with Christian Aid to promote its current account to supporters of the charity; for each current account opened, smile makes a £50 donation to Christian Aid. 2003 saw the further development of the smileinvest ethical investment offering. Additional ethical investment information and a range of discounted ethical funds were added to this area of the smile website. As at the end of February 2004, approximately 12% of all investments (by value) made through the funds supermarket were deposited with ethical funds.
  
• Ethical savings product for corporate customers The viability of an 'ethical' savings product for corporate customers was investigated in 2003. The key feature of the product was to be the provision of a charitable donation which would be funded via a reduced interest rate margin. Research found that just one in three respondents (31%) expressed an interest in such a product. The bank does not consider that the general level of interest amongst corporate customers is such as to merit the launch of an ethical deposit product. Instead, a variation of this concept has been incorporated into Community Directplus, as described below.
  
• Community Directplus The bank's Community Direct product was enhanced and relaunched in July 2003 as 'Community Directplus'. This telephone and internet-based account is designed to provide the banking solutions most commonly required by community organisations, charities, social enterprises and co-operatives. Customers do not pay a monthly service charge, or any fees for credits and debits, and are not charged for writing cheques. Additionally, a small fund (at least £10,000 per annum) is available for Community Directplus customers to apply to for donations. They receive interest on credit balances in excess of £2,000, and charitable donations are made by the bank in relation to the size of total credit balances: 10p for every £100 of new to bank balances.
  
• Community Umbrella Guarantee Scheme Many community organisations are grant funded by their local authority. As grants can sometimes take several months to be paid, some community organisations may experience cash flow problems. During 2003, the bank worked alongside a number of authorities to pilot a new funding mechanism - the Community Umbrella Guarantee Scheme. As part of this, the bank sets up a bank account with overdraft facilities for each community organisation, on the understanding that the local authority will provide a guarantee for monies pending. Following the successful pilot scheme, it is intended that more local authorities will be offered the opportunity to participate in the scheme in 2004.
  
• PayPoint for charities PayPoint provides a service that allows individuals to make cash payments to Local Authorities, Housing Associations and some credit unions at local PayPoint agents (such as newsagents and garages) using a plastic card. It provides a convenient alternative payment method to more disadvantaged sections of the community who may not have access to traditional banking services. In 2003, the bank began to examine whether or not the PayPoint network could be used by individuals to facilitate charitable donations. PayPoint expressed interest in this proposal and the bank has initiated discussions with a number of charities to explore the potential for this arrangement. Discussions are ongoing, but it is intended that this facility will be made available to charities through both the PayPoint network and Bill Payment network when the latter becomes available in 2004.