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EXCLUSION: Access to banking services in the UK is criticised by Citizens Advice.
Posted by Lucy Cochrane on Tuesday, January 24th, 2006 at 05:01 PM

Banks are merely paying lip service to helping their most vulnerable customers and would-be customers.


A bank account is now essential to everyday life: yet one in 12 households - 2.8 million adults - in the UK still don’t have one. With all benefits and state pensions now having to be paid direct into bank accounts, banks have been under pressure to offer basic bank accounts with facilities for standing orders and direct debits but no overdrafts. Despite commitments in the Banking Code to offer basic accounts, many banks continue to put unreasonable obstacles in the way of people opening accounts, insisting on certain forms of ID, or failing to provide any information about basic accounts. People refused bank accounts usually have to fall back on costly cheque cashing services charging an average 10% per transaction. Some banks are doing better than others. For example, Barclays have recently made improvements including displaying basic bank account application forms in all their branches and modifying their rules on ID. Citizens Advice is urging all banks to follow their lead and get on board with financial inclusion. Its report shows that vulnerable people who do succeed in opening a basic account can end up paying a high price for a second class service which becomes a cause of debt problems rather than a tool for helping them manage their money better.


Based on evidence from Citizens Advice Bureaux, across the UK including Northern Ireland shows how time and again banks are failing to meet the needs of according to a report out today from national charity Citizens Advice. those on the margins of the financial mainstream, by refusing to let them open basic bank accounts, or hitting them with high charges when they do. up to £39 for a single failed direct debit - often triggered by late payment of benefits or tax credits - and the way banks siphon off money from accounts to pay outstanding debts can leave vulnerable customers with too little to live on. Also, it often takes up to ten days to clear a cheque through a basic bank account instead of the standard three to four working days, putting customers at greater risk of any direct debits failure. Banks also frequently take money out of accounts to pay off loans due to them first, without checking the customer has enough to pay other debts. Sometimes this puts low-income customers into rent arrears and facing the risk of eviction.

It is urging the Government’s Financial Inclusion Task Force to make the business case to the banks to act on its recommendations. The charity is calling on all banks to review their existing basic bank accounts against a set of key principles including:
*Making accounts available to people in financial difficulties
*Providing the same standards of service as those offered to current account holders
*Not taking money out of the account to pay debts to the bank first without agreement with the customer
*Capping charges for failed direct debits and standing orders to a reasonable amount
*Offering a buffer overdraft zone of £10

Citizens Advice also wants basic bank accounts to be better promoted, more flexibility about acceptable forms of ID for opening an account, and more co-operation between the banks and the Post Office so that people can use either to withdraw money from their account.

ID: 37893
Author(s): iff
Publication date: 24/01/06

Created: 18/07/06. Last changed: 18/12/06.
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