Halifax Bank has had its share of controversy, including incredible amounts of fraud and corruption that were exposed in recent years. However, a look at reports regarding the bank’s approach to environmental, social, and governance (ESG) topics shows an image of an upstanding group leading the way in UN Sustainability Goals. So we had to ask: How ethical is Halifax Bank?

Halifax Bank is not considered an ethical company, due to its involvement in arms trade, history in crimes and corrupt employees, using tax havens, and systemic mortgage fraud. But on the plus side, the banking group has ambitious sustainability goals and is making great strides toward these.

It matters where you store your money, as there are consequences that go beyond your saving potential. From its questionable past to its future intentions, this article will give you all you need to know about Halifax Bank so you can decide if it is the right ethical banking choice for you.

Who Is Halifax Bank?

Formerly known as Halifax Building Society, Halifax was founded in its namesake town in West Yorkshire in 1853. Seventy years later, it had become the largest building society in the UK. Halifax maintained its position as a giant, growing and prospering until it demutualized in 1997.

After demutualization, it became a public limited company, Halifax plc, an FTSE 100 Index division. And in 2001, the company merged with The Bank of Scotland to form HBOS. Five years later, the Halifax chain’s liabilities and assets were legally transferred to the Bank of Scotland after the HBOS Group Reorganisation Act 2006 was enacted. At this time, Halifax became a division of the Bank of Scotland, which turned into a standard plc.

The Court Session, on January 12, 2009, approved the Lloyds TSB takeover of HBOS, and Halifax and its parent, the Bank of Scotland, officially became a part of Lloyds Banking Group a week later. Halifax has been owned by Lloyds Banking Group plc–one of the ‘Big Four’–ever since. 

How Ethical Are They?

These days, Halifax is bound to Lloyds Banking Group, and where Lloyds goes, so shall Halifax follow; all of Halifax’s ethics are those of Lloyds. And, as you will see, they are pretty much what you might expect from one of the High-Street-gang. 

But even before HBOS was taken over, they were involved in unethical practices. 

Ties to the Arms Trade

A report was released by War on Want that had documented the extent to which UK commercial banks made loans, provided banking services for, and invested in arms companies. The charity mentioned that HBOS, at the time, held £483.4 million in shares in UK arms and served as the prominent banker for Chemring and Babcock International.

It is believed that Lloyds Banking Group and all of its subsidiaries are still currently investing in arms and military equipment.

Serious Crimes, Corrupt Employees, but No Apologies

In 2010, the Serious Organised Crime Agency arrested some HBOS employees and others on fraud suspicion. In early 2017, after a four-month trial, Lynden Scourfield and Mark Dobson were both convicted on several counts, including fraud, bribery, money laundering, and corruption concerning a scheme costing the bank £245 million. 

Lloyds remained quiet throughout the ordeal and after, but they were made to pay £100million in compensation to victims of the fraud. More recently, Noel Edmonds settled in July 2019 with the bank, and we’re still awaiting Dame Linda Dobbs’ report on the matter.

Tax Havens Still Suspected

ActionAid put out a report in 2011 that showed big banking and financial companies on the London Stock Exchange were using tax havens more than any other of the UK’s largest companies in any other sector. It was reported that between the ‘Big Four’ banks of High Street–RBS, Barclays, HSBC, and Lloyds Group–there were 1,649 tax haven subsidiaries found.

A primary reason for using tax havens is so that companies can avoid corporate taxes. And these acts often have far-reaching impacts on countries that are still developing and lack the necessary funds for crucial services like education and healthcare. Lloyds Banking Group was alleged to be encouraging wealthy customers to funnel money through China to avoid taxes.

In 2013, the CEO of Lloyds vowed to pull out of tax havens, stating it was “very wrong” that the money was not kept in the country and used to benefit the UK. 

Halifax and its owners do not offer this information readily. However, many consider it very likely that tax havens are still being used unethically today, though it is unclear how many the banking group may be associating with.

Systemic Mortgage Fraud

During a 2003 investigation by The Money Programme, undercover researchers exposed mortgage fraud to be a systemic problem throughout HBOS. Afterward, further examples have surfaced that reveal mortgage brokers taking advantage of HBOS fast track processing systems by falsifying details, often without an applicant’s consent or knowledge.  

Big Losses in Bad Loans

Mere weeks after acquiring HBOS, Lloyds Banking Group disclosed its losses of £10bn, which was £1.6bn higher than what had been anticipated a few months earlier. This was due to a weakening in the company profits alongside the decline in the housing market at the time. Lloyds Banking Group’s share price on the London Stock Exchange plunged 32%, taking all other bank shares, including Halifax, down with it.

Lloyds Banking Group’s Approach to ESG Topics

It’s almost out of character for a banking group with such an ugly, unethical past to have such promising and appealing goals emerge in its annual reports on ESG topics. Lloyds Banking Group recognizes that maintaining a sustainable business model is the fundamental component of being a responsible citizen. And their Helping Britain Prosper plan plays an essential role in their strategy.

The group has but one environmental goal: help the transition to a sustainable low carbon society.

Committed to the Transition to a Sustainable Low Carbon Society

Under the Lloyd umbrella, Halifax is committed to being a leader in supporting a successful transition to a low carbon economy for the UK. The goal is admittedly ambitious and must be done in measured increments, which the group has been working on already for many years.

The group plans to work with the market, its customers, and Government to help reduce their financed carbon emission by 50% by or before 2030. New energy, carbon, and travel targets were set in 2020, and there is a plan for full implementation of the TCFD by 2022. They were also one of the first businesses to sign up for all three campaigns launched by The Climate Group.

The banking group also plans to plant 10 million trees over the next decade through a partnership with the Woodland Trust.

Support statements were added in their automotive and agricultural sectors for 2021. In the automotive sector, the group says it will continue to support the identification of cost savings through the manufacturing, development, and operation of increasingly efficient vehicles that claim low environmental burden. The group believes this will help to achieve its targets in CO2 reduction.

To accomplish this, Lloyds says it will change its internal car scheme so that it only supplies zero-emission vehicles.

When it comes to agriculture, support is focused on customers as the sector transitions into an environment of lower carbon. It states that the group will develop “new innovative products” to assist in customer support during this transition.

Additionally, the group states it will support customers in reducing their carbon input production to align with NFU’s 2040 target to make British farming carbon neutral.

It is also worth noting what the group has stated it will not support throughout its sectors, as these things are not in line with their objectives. Lloyds and all its subsidiaries will not support:

• Businesses engaged in activities that harm or endanger animals, including testing or using animals for entertainment
• Businesses that are without environmental licenses or persistently breach regulations
• New or existing customers participating in fur activities (excluding leather and wool)
• Fisheries that use damaging methods
• Fisheries with direct involvement in commercial whaling, trading in shark fin or shark-finning, or IIU (Illegal, Unreported, or Unregulated) fishing activities or trade products
• Projects that may threaten a Ramsar Wetland’s special characteristics
• Projects that could place a World Heritage Site on the ‘In Danger’ list (except when the World Heritage Committee agrees in advance specifically to that project)

Final Thoughts

With ethical banking lacking a strict definition, individuals are left to conduct thorough research into their options to find banks with ethical investments that are concerned about their overall impact. If you’re considering banking with Halifax Bank (or any of the big players), such a decision could pay off handsomely for society and the planet. But with a history of stepping on taxpayers and human rights, a sustainable global future may come at your expense.

Stay impactful,

Sources

• National Archives- Discovery: Catalogue description HALIFAX BUILDING SOCIETY 
• Legislation.gov: HBOS Group Reorganisation Act 2006
• Wikipedia: Halifax (bank)
• Lloyds Bank
• Wikipedia: HBOS
• WayBack Machine Web Archive: War on Wants: Banks slated on arms sales     
• Wikipedia: Chemring Group
• Wikipedia: Babcock International
• Curiously Conscious: A Guide to Ethical Banks & Bank Accounts
• The Telegraph: Lloyds shares tumble as HBOS slumps to £10bn loss
• Reuters: Inquiry into Lloyds’ handling of HBOS fraud slips to 2020 – source
• The Shopping Guide: Ethical Banks and Building Societies
• The Guardian: Bailed-out Lloyds faces tax avoidance allegations
• The Guardian: Lloyds chief pledges to pull out of tax havens
• Lloyds Banking Group: Our approach to Environmental, Social and Governance (ESG) topics February 2020
• Lloyds Banking Group: Helping Britain Prosper Plan
• Task Force on Climate-related Financial Disclosures
• The Climate Group
• Investors: Why Calling Electric Cars’ Zero Emission’ Is Blatantly False Advertising
• NFU: Achieving NET ZERO Farming’s 2040 goal           
• AG Web: Future of Farming: Chase to Capture Carbon As Another Revenue Stream
• UNESCO: World Heritage List