'A legal right to a bank account'

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BBC - Peston's Picks: 'A legal right to a bank account'

Robert Peston | 00:01 UK time, Tuesday, 23 March 2010

British banks would be legally obliged to provide a basic bank account to every UK citizen, under plans to be unveiled in tomorrow's budget.

This universal service obligation on banks, which will require new legislation, is the Treasury's latest initiative to reduce what it calls financial exclusion, or the alienation of poorer and disadvantaged individuals from financial services that most of us take for granted.
According to a recent report by the Treasury's Financial Inclusion task force, there are 1.75m adults with no access to a transactional bank account, or an account that can be used to pay bills and receive a salary or benefit payments.

A high proportion of these unbanked were retired, or below the age at which National Insurance is payable. More than 50 per cent of them are among the 20 per cent poorest in the country.

The Chancellor, Alistair Darling, is convinced that gaining access to a bank account enhances an individual's ability to find permanent employment - although the connection is not straightforwardly obvious.

Also, Labour and the Tories are both vying with each other over policies to promote the provision of fast internet connections in homes. And a separate government "inclusion" taskforce, this time on Digital Inclusion, has argued that households that are offline miss out on savings of £560 per year from shopping and paying bills online.

These "online" savings are only available to those with bank accounts and debit or credit cards - so the unbanked cannot tap them.
Britain's banks are unlikely to welcome the legislation forcing them to provide a basic account to anyone with a provable residential address. They will probably see it as a bureaucratic burden and will point out that they have already made great strides to increase the availability of basic bank accounts: the number of unbanked individuals has halved since 2002.

Also, the use of bank accounts in the UK is proportionately high by international standards.
The Government believes that banks have a duty as corporate citizens to contribute more to Britain, especially in the wake of the substantial financial support they've received from taxpayers since the onset of the Credit Crunch in 2007.

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Re: 'A legal right to a bank account'

'Britain's banks are unlikely to welcome the legislation forcing them to provide a basic account to anyone with a provable residential address. They will probably see it as a bureaucratic burden and will point out that they have already made great strides to increase the availability of basic bank accounts: the number of unbanked individuals has halved since 2002.'

Well this would be a real turn up for the books wouldn't it legislation forcing the banks to do something against their wishes.
I hardly think it would be a bureauratic burden meself. more of a 'we can't find a way of milking basic accounts as we don't offer any of our services that can be charged for on them'.

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Re: 'A legal right to a bank account'

Mmm I'm not sure what the 'legal obligation' is.

According to a written Parliamantary question to Sarah McCarthy-Fry 2 weeks ago it's a ''voluntary agreement''.


Treasury

Bank Services

John Mann: To ask the Chancellor of the Exchequer what support his Department is providing to those who cannot open a bank current account because of their credit rating. [321466]

Sarah McCarthy-Fry: The Government have negotiated voluntary agreements with all the major UK banks to offer a basic bank account. Basic bank accounts do not offer overdrafts so new customers do not have to pass a credit check to qualify for an account.


House of Commons Written Answers 12 March 2010

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Re: 'A legal right to a bank account'

My only worry is that the banks on so doing this kind deed (whoops nearly choked then) would then start to offer alternative accounts and overdrafts etc after a certain period, this would imho bring everything back to square one with the charges issues. I think it should be made clear from the start that the account is exactly what is stated and that proper responsible lending rules shoud be inforce so as not to let the vunerable on the slippery slide of debt again.
I have in mind my son when I say this because his credit rating is shot to bits and I prefer it that way as he is managing on a cash only basis. He would jump at the chance of a credit card if he could or an OD if it were put on a plate for him.

[Amethyst]

Re: 'A legal right to a bank account'

HSBC have a 'proper' basic account - no charges and if you bounce a DD 3 times you get kicked out - and no debit card (as at Nov 09 ) as do Northern Bank - all the others have charges if you bounce DD's/SO's ( http://www.moneymadeclear.fsa.gov.uk...unts_table.pdf )

And the credit check thing is basically rubbish.

If they are going to force banks to offer basic accounts to all they should force them back to the CAT standard ( Legal Beagles Consumer Forum )

Legal wise I guess their views have changed since this...

Question 5: Should all providers be obliged to offer basic bank accounts to all citizens throughout the EU?

22. No - the UK experience has been that a co-operative approach can achieve good results, with the industry making a voluntary commitment to ensure that basic accounts are available to all and working to develop appropriate promotion and staff awareness of the product. Additional support to vulnerable groups of individuals from voluntary organisations also helps stimulate demand and reduce the barriers to accessing existing products.

23. Although all EU citizens should ultimately be able to have access to a basic bank account in whatever country they are in, it is not necessary or realistic to oblige providers to offer a universally available account. While most high street banks could reasonably be expected to offer a basic bank account available to anyone that is resident in the country there is little point, for example, in requiring private banks to offer basic bank accounts. It is undesirable to impose costly additional regulatory requirements to achieve an outcome that could also be reached more efficiently through positive engagement with industry.

24. A universal obligation on providers to offer basic bank accounts is not a necessary condition of universal access to basic bank accounts by consumers, and could even be counter-productive if institutions feel that they have fulfilled their obligations simply by making such a product available without engaging with broader financial inclusion issues. These include ensuring that account features are suitable for the needs of vulnerable customers, and that branch staff are properly informed about the account.

EU Consultation on Financial Inclusion: Ensuring access to a basic bank account - Legal Beagles Consumer Forum

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Re: 'A legal right to a bank account'

BBA statement on basic bank accounts:



Budget speculation on basic bank accounts


23/03/2010

"Everybody can have a bank account if they want one, unless (and this is rare) the law says they can't. In recent years UK banks have worked with the Government to cut financial exclusion, halving the number of households without a bank account. Every month 40,000 more people open basic accounts.

"The UK is a world leader in providing its citizens with access to banking. The banks are also working with voluntary organisations and advice centres, as well as the Government task force on financial inclusion, to ensure access to banking for all. We look forward to seeing how any announcement in the Budget would tie in with this ongoing partnership between Government, the banks and the voluntary sector."
Facts about basic bank accounts

• All the major banks offer basic bank accounts. The Government and the banking industry met the Shared Goal agreed in 2003 to reduce the number of adults in unbanked households by half. The number of people without access to a transactional account has been halved from 3.57 million in 2003/04 to 1.75 million in 2007/08.
• There are now almost 8 million basic bank accounts, accessible through branches and post offices and operating alongside the Post Office's own card account for the direct receipt of benefit payments and providing automated bill payment capabilities and ATM-access to cash.
• Some 120 million personal accounts offering instant cash access are held with the main high street banks.
• Between 2006/07 and 2007/08 there was a fall in the number of unbanked adults of 175,000. If this rate of decrease continues then the total number will half again within five years.
• The BBA and its members continue to work in co-operation with the Financial Inclusion Task Force to improve access to appropriate financial products.

Notes to Editors:

On 20 October 2009 HM Treasury issued the following press release
Number of households without bank accounts cut by half
The Government and the Financial Inclusion Taskforce are pleased to announce today that the shared goal to halve the number of adults living in households without access to a bank account has been achieved.
The shared goal was agreed in December 2004 between the Government and the banks. The latest report on access to banking by the Financial Inclusion Taskforce shows that the number has fallen from 2 million in 2002/03 to less than 900,000 in 2007/08.
Sarah McCarthy-Fry, Exchequer Secretary to the Treasury said:
We welcome the announcement that this very important goal has now been achieved. The shared goal is a great example of government, industry and third sector partners working together to ensure that everyone can access the financial services they need to get by day-to-day.
HM Treasurys full press release can be read here.
The BBAs statement, issued simultaneously on 20 October 2009, can be read here.