Budget speculation on basic bank accounts

[Legal Beagles]

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[natweststaffmember]

Re: Budget speculation on basic bank accounts

Could this end 'free banking'?

The end of "free banking" could be in sight if everyone in Britain is entitled to open a bank account, experts have warned.



By Harry Wallop, Consumer Affairs Editor
Published: 4:33PM GMT 23 Mar 2010

A bank account and debit card for everyone - but at what cost?


Alistair Darling, the Chancellor, is expected to announce in this week's Budget that everyone will be legally entitled to a basic bank account.
Even bankrupts and those with a very poor credit history should be allowed an account with a debit card. This would allow "financially excluded" consumers access to cheaper utility bills and make it easier for them to receive benefits and start a job.

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However, some experts have warned that sensible bank customers will end up picking up the cost of scheme, through fees or higher charges and poorer interest rates.
Michelle Slade of monefacts.co.uk, the personal finance website, said: "It will inevitably cost the banks more money to offer this service, and they will have to recoup the costs some how. Of course it will come from the average man in the street."
The British Bankers' Association (BBA) denied costs would go up, pointing out that its members have already helped many poor people open accounts, with no impact on other consumers.
In 2003, the Government and the banking industry established the Financial Inclusion Task Force to help people open bank accounts. Around 8 million adults have basic bank accounts – accounts with no overdraft or credit card, with nearly every major bank offering the service. Between 2003 and 2007, the number of adults without access to an account fell from 3.57 million to 1.75 million, according to the BBA.
However, campaigners argue that in practice most consumers find it very difficult to open an account, with many bank staff unhelpful or ignorant about these basic accounts. Only Barclays and the Co-operative Bank allow bankrupts to open accounts.
Mick McAteer, the head of Financial Inclusion, a think tank that has helped campaign for greater access to bank accounts, said: "This will be a big step forward. There is now, slowly, a recognition that a transactional bank account is as important for people as utilities."
His research suggests that consumers without a bank account – and therefore unable to set up direct debits – end up paying between £500 and £900 more each year on their insurance, utility bills and shopping.
Most gas, electricity and telephone companies charge customers that pay by cash far more than if they pay by direct debit.
It is understood that banks will be forced to market their basic bank accounts but it will be up to consumers to ask to open one. If a consumer is refused, they will be able to complain to an official watchdog, most likely to be the Financial Services Authority.
Ms Slade said it was inevitable that banks, who already are introducing more accounts that charge a monthly fee, will continue with the trend, to recoup these costs.
“The change could be another nail in the coffin for free banking, with banks looking to regain the additional cost potentially through the introduction of monthly fees. Virgin Money has already stated that when it launches a current account, it will look to charge a monthly fee, albeit with the overdraft charges included within it. This may open the flood gates for other providers to follow suit.
“Already, the number of fee paying accounts has more than doubled in the last five years and this is only going to increase further.
“While the heart of this initiative is in the right place, in practical terms it may cause more expense for the majority of customers further down the line.”



This old crap coming up again. Someone slap Ms Slade from moneyfacts please.


Could this end 'free banking'? - Telegraph

[Amethyst]

Re: Budget speculation on basic bank accounts

thought the bba said it was bull poop ?

guess we'll see at half twelve.

[Amethyst]

Re: Budget speculation on basic bank accounts

yip bull