UK Banks Overhaul Basic Accounts
The UK's largest banks have agreed to improve access to basic bank accounts after the Financial Conduct Authority (FCA) found that many vulnerable customers were not receiving the support they needed when trying to open an account. The regulator said some banks failed to offer suitable accounts to eligible customers, which created unnecessary barriers for people already facing financial hardship or homelessness.
Basic bank accounts are designed to provide essential banking services to people who may not qualify for a standard current account. They are available free of charge, do not include an overdraft facility, and allow customers to receive wages, pensions and benefits, make payments using a debit card, and set up direct debits and standing orders.
(Source: Financial Conduct Authority)
These accounts are very important for people with poor credit histories, those who are bankrupt, or people who are on official debt recovery plans. Some banks also work with charities to help homeless individuals verify their identity and access these accounts.
More than four million people in the UK currently hold basic bank accounts, which are offered by nine major banks and building societies. These include Barclays, The Co-operative Bank, HSBC, Lloyds Banking Group, Nationwide Building Society, NatWest, Santander, TSB, and Virgin Money.
The FCA's findings were based on a mystery shopping exercise that involved 298 interactions with banks through branches and telephone services. The results showed that only 28% of customer experiences were rated as good or very good, while 38% were considered fair. However, 20% of interactions were rated as poor and a further 14% as very poor.
(Source: Financial Conduct Authority)
Among the most common issues were banks failing to recommend basic bank accounts to customers who clearly qualified for them, particularly people without a permanent address. In several cases, customers were directed toward online applications for standard accounts that were not appropriate for their circumstances, despite needing more support or alternative application methods.
After the FCA's intervention, the participating banks committed to making the application process more accessible and ensuring eligible customers are offered the correct account from the outset. They also agreed to make it easier for people without standard forms of identification or a fixed address to open an account, while providing alternatives to online-only applications for customers who may be vulnerable or digitally excluded.
