Some of the UK’s biggest banks are failing their most vulnerable customers, according to the financial regulator.
Banks are pushing homeless or financially struggling people to use inappropriate online applications and give up their main bank accounts.
These accounts are free, do not include an overdraft facility, and provide essential banking services to those who are unable to open a primary account.
Now nine UK banks and building societies that operate mainstream bank accounts have agreed to the Financial Conduct Authority’s (FCA) demands for easier access.
Basic bank accounts have many of the same features as a regular checking account, but are designed for those who might otherwise be excluded from the banking system. More than four million people in the UK have these accounts.
They are offered by Barclays, The Co-operative Bank, HSBC, Lloyds Banking Group (including the Halifax and Bank of Scotland brands), Nationwide Building Society, NatWest (including the RBS and Ulster Bank brands), Santander, TSB and Virgin Money.
Features include:
accepting payments such as wages and benefits, and allowing account holders to make payments using debit cards, direct debits and standing orders.
free, but no overdraft facility
Available to those who have a bad credit history, are bankrupt, or have a formal debt collection plan
some access for homeless people, working with charities to verify someone’s identity
However, in the FCA’s mystery shopping survey, a third of the experience with basic bank accounts was rated as poor or very poor.
The study covered 298 branch and telephone interactions and rated 28% as good or very good, 38% as fair, 20% as poor and 14% as very poor.
Problems included the inability to offer these accounts to people who needed them, especially those without a permanent address.
Some pushed vulnerable customers towards online applications to open an account that was not suitable for their needs.