UK Banks Failing Vulnerable Customers with Basic Account Access, Regulator Finds
Quick Look
- UK banks are failing vulnerable customers, including the homeless, by pushing them towards unsuitable online applications instead of offering basic bank accounts.
- The FCA found a third of customer experiences with these accounts were poor or very poor.
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Why It Matters
The Financial Conduct Authority (FCA) has found that some of the UK's largest banks are failing to adequately serve their most vulnerable customers, particularly those experiencing homelessness or financial hardship, by directing them away from essential basic bank accounts.
Some of the UK's biggest banks have been failing their most vulnerable customers, according to the financial regulator.
Banks have been pushing homeless people or those in financial hardship towards unsuitable online applications and away from basic bank accounts.
These accounts are free, do not include an overdraft facility, and provide essential banking for those unable to open a mainstream account.
Now, the nine UK banks and building societies which operate basic bank accounts have agreed to demands from the Financial Conduct Authority (FCA) to make access more straightforward.
Basic bank accounts have many of the same functions as a regular current 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:
But a mystery shopping exercise by the FCA rated a third of experiences with basic bank accounts as poor or very poor.
The exercise covered 298 interactions across branches and by telephone, and rated 28% of cases as good or very good, 38% as fair, 20% as poor and 14% as very poor.
Problems included failing to offer these accounts to people who needed them, particularly those with no fixed address.
Some pushed customers in vulnerable circumstances towards online applications to open an account unsuitable for their needs.
Open Questions
- Will banks face penalties for these failures?
- What specific changes will banks implement?
- How will the FCA monitor compliance?
