People struggling should find
it easier to
access basic bank accounts, after nine
banks committed to improving widespread poor
practice identified by the Financial Conduct
Authority (FCA).
Nine of the
biggest UK banks and building societies are
legally mandated to
offer basic bank accounts. They exist to
serve people who may not otherwise be able
to access standard current accounts - providing
access to essential services with no fees and
no overdraft.
A mystery shopping exercise by the FCA
found a third of experiences with basic bank accounts rated
as poor or very poor.
The mystery shop revealed that the
bank account providers were not consistently offering these
accounts to customers who could benefit from them. This included
people facing financial hardship or without standard
identification, and especially those with no fixed address. The
firms often failed to mention basic bank accounts at all and
pushed customers in vulnerable circumstances towards online
applications unsuitable for their needs.
To address this, the banks and
building societies have agreed to individual improvement plans
and we've worked with UK Finance to secure a collective
commitment for the firms to:
-
Provide the right account for
customers, first time, with clear communication and
minimal friction.
-
Make
it straightforward for customers without standard ID
or a fixed address to open an
account.
-
Spot vulnerability early and offer
accessible alternatives to online-only
journeys.
Emad Aladhal, director of retail banking at the
FCA, said:
Progress has been
made with over 97% of UK adults
having a current account, but our latest work
shows that all too often banking firms' engagement with customers
still needs improvement. 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.
That's why the biggest banks have
now committed to improving how they are offered
and we'll be holding them to account to make sure change
happens.
Peter Tyler, Director of Personal Banking at UK Finance,
said:
A basic bank account can be an
important first step towards financial independence, and while
most customers who hold one have positive experiences, we
recognise that more can be done to ensure consistently good
outcomes for everyone. That is why UK Finance and our members are
committed to raising industry standards and expanding
access.
The recently
expanded Breaking the Cycle initiative is a key part of this work,
providing practical support to those facing barriers to accessing
essential banking services, such as individuals without a fixed
address.
Notes to
editors
-
The nine banking institutions that
are legally required to offer Basic Bank Accounts are Barclays
UK, The Co-operative Bank, HSBC UK, Lloyds Banking Group
(including Halifax and Bank of Scotland brands), Nationwide
Building Society, NatWest Group (including RBS and Ulster Bank
brands), Santander UK, TSB and Virgin Money UK (now a brand of
Nationwide Building Society).
-
The mystery shopping exercise
covered 298 interactions across branches and
telephone. The exercise tested two scenarios: a person
experiencing financial hardship with non-standard ID, and
someone who had been through bankruptcy but had
standard ID. Both showed characteristics of
vulnerability.
-
Across 298 mystery shops, the FCA
rated 28% of interactions as good or very good, 38% as fair,
20% as poor and 14% as very poor.
-
As revealed in the
FCA's Financial Lives survey, in 2024, over 97% of UK adults having a
current account. While 4.3 million UK adults had a basic
bank account, around 0.9 million adults were unbanked (they had
no current account). The survey also found that in the two
years to May 2024, 10% of the 1.3m adults who recalled applying
for a basic bank account said they were
declined.
-
The FCA enables a fair and thriving
financial services market for the good of consumers and the
economy. Find out more about the
FCA.
