The next chapter in finance: why we support the Charter for a New Financial System
A blog written by Anna Laycock while she was Ethics Manager at Ecology Building Society, a pioneering mutual financial institution which lends exclusively for sustainable properties and projects. She led Ecology’s communications and research programmes and has a background in campaigning and evaluation. Ecology signed up as supporters of the Charter for a New Financial System, Anna explains why.
The story of the expansion and collapse of our financial system might read to some as a thriller, to others as a moral fable, or – to those who still bear the costs of the crisis – a horror story.
We’ve all heard the tales of how the system has failed us, not just once, but time and time again. We’ve seen the damage it’s caused to our society and economy, and we can point to the individuals, organisations and policies that contributed to these failings. We’ve started to understand the cultural and structural flaws that created and sustained the problem, from short-termism and rent-seeking to opacity and incomprehensible complexity.
The narrative of the broken financial system is firmly rooted in current debate. But it’s not the end of the story – or at least it shouldn’t be. We need to start talking about solutions: what would the financial system look like if it worked in a very different way, to serve people and protect the environment?
The widespread acknowledgement that our financial system is broken is our opportunity to argue that it doesn’t need to be fixed; it needs to be transformed. We want to see a diverse banking sector where no institution is too big to fail or too complex to manage, which takes a long term approach and focuses on investment in the real economy. We want citizens’ money to be invested in projects that build a sustainable future, with transparency for savers and accountability to communities. And we want to see regulation which supports innovative models that make finance more democratic and socially useful.
This isn’t a fairy story. We know it can be done, because at Ecology we’ve been doing it successfully for 32 years. We lend on properties and projects that benefit the environment and support sustainable communities and enterprise. Our loans are funded only by our range of fair, transparent savings accounts, and we’re owned by our members, who have a say in what we do. It’s a simple model, but one which has taken us from an initial investment of £5,000 in 1981 to assets of over £110m this year.
Today we’re part of a thriving alternative finance sector encompassing values-based banks, crowdfunders, ethical investment portals, incubators and think tanks. Many of us have signed up to the Charter for a New Financial System because it articulates a positive vision of how money could and should work for the benefit of people and the planet. This is how we think the next chapter of finance should read.