A third of experiences with basic bank accounts were rated as poor or very poor in a Financial Conduct Authority mystery shopping exercise, as the regulator accused some of the UK’s biggest banks of failing their most vulnerable customers.
The FCA’s investigation covered 298 interactions across branches and by telephone. It found that 28% of cases were good or very good, 38% fair, 20% poor and 14% very poor. Banks were pushing homeless people or those in financial hardship towards unsuitable online applications and away from basic bank accounts – accounts that are free, offer no overdraft and provide essential banking for those unable to open a mainstream account.
“A third of basic bank account experiences rated poor or very poor, says FCA”
More than four million people in the UK use these accounts, which accept wages and benefits, allow debit card payments, direct debits and standing orders, and are available to those with bad credit history, bankruptcy or debt recovery plans. Some even provide access for homeless people by working with charities to confirm identity.
The nine banks and building societies that offer basic bank accounts – 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 – have now agreed to demands from the FCA to make access more straightforward.
“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,” said Emad Aladhal, director of retail banking at the FCA.
The agreement includes three commitments: provide the right account for customers first time, make it straightforward for customers without standard ID or a fixed address to open an account, and offer alternatives to online applications to those who are vulnerable.
Peter Tyler, director of personal banking at trade body UK Finance, acknowledged the problem. “We recognise that more can be done to ensure consistently good outcomes for everyone,” he said, pointing to the Breaking the Cycle scheme, where banks work with housing charity Shelter to ensure people with no fixed address have access to an account.
Whether the pledges will translate into better service for the UK’s most financially excluded remains to be seen.