Banks have been steering homeless people and those in financial hardship towards unsuitable online applications, away from the basic accounts designed to help them, according to the financial regulator.
A mystery shopping exercise by the Financial Conduct Authority (FCA) rated a third of experiences with basic bank accounts as poor or very poor. Of 298 interactions across branches and telephone, just 28% were judged good or very good, while 38% were fair, 20% poor and 14% very poor. The problems included failing to offer these accounts to people who needed them, particularly those with no fixed address, and pushing vulnerable customers towards online applications that were not right for their needs.
“FCA finds banks pushing homeless and vulnerable away from basic accounts, with a third of experiences rated poor.”
Basic bank accounts are free, do not include an overdraft, and provide essential banking for the more than four million people in the UK who might otherwise be excluded from the banking system. They are offered by Barclays, The Co-operative Bank, HSBC, Lloyds Banking Group (including Halifax and Bank of Scotland), Nationwide Building Society, NatWest (including RBS and Ulster Bank), Santander, TSB and Virgin Money. They allow payments such as wages and benefits, and account-holders can use debit cards, direct debits and standing orders. They are available to those with a bad credit history, bankruptcy or an official debt recovery plan, and some access is available for homeless people through charities that can confirm identity.
Emad Aladhal, director of retail banking at the FCA, said: “Bank accounts are important for financial inclusion, and this is about making sure the very people who could benefit from basic bank accounts are not missing out.”
The nine banks and building societies that operate these accounts have now agreed to FCA demands to make access more straightforward. They will provide the right account for customers first time, make it easier for those without standard ID or a fixed address to open an account, and offer alternatives to online applications for vulnerable people.
Peter Tyler, director of personal banking at trade body UK Finance, said: “We recognise that more can be done to ensure consistently good outcomes for everyone.” He pointed to the Breaking the Cycle scheme, run with housing charity Shelter, which aims to ensure people with no fixed address have access to an account.
The question remains whether these voluntary agreements will be enough to prevent the same failures from recurring.