The Financial Conduct Authority (FCA) has secured commitments from major UK banks to improve access to basic bank accounts after a mystery shopping exercise found widespread poor practice. Around a third of interactions with basic bank account services were rated as poor or very poor, according to the regulator.
What Are Basic Bank Accounts?
Basic bank accounts are simplified accounts designed for people who may not be able to access standard current accounts, often due to a poor credit history. They provide essential banking services without an overdraft, enabling users to receive wages, benefits, and pay bills. Under the Payment Accounts Regulations 2015, the nine largest personal current account providers in the UK are legally required to offer these accounts to legally resident consumers who do not have a UK bank account or are not eligible for other payment accounts.
FCA Mystery Shopping Results
The FCA conducted 298 mystery shops across branches and by telephone, testing two scenarios: a person experiencing financial hardship with non-standard identification, and someone who had been through bankruptcy but had standard ID. Both exhibited characteristics of vulnerability. The regulator rated 28% of interactions as good or very good, 38% as fair, 20% as poor, and 14% as very poor.
Key issues identified included firms not consistently mentioning basic bank accounts early enough in conversations, failing to offer accounts to customers who could benefit, and not recognising or responding to vulnerability characteristics. Staff often pushed vulnerable customers towards online applications unsuitable for their needs, and firms frequently failed to mention basic bank accounts at all.
Commitments to Improve
To address these problems, banks and building societies have agreed to individual improvement plans. The FCA worked with UK Finance to secure a collective commitment from the firms. They commit to providing the right account for customers first time with clear communication and minimal friction, making it straightforward for customers without standard ID or a fixed address to open an account, spotting vulnerability early, and offering accessible alternatives to online-only options.
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.”
Industry Response
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.”
Current Account Statistics
The FCA’s Financial Lives survey indicated that in 2024, more than 97% of UK adults had a current account. While 4.3 million UK adults had a basic bank account, around 900,000 adults were unbanked with no current account. The nine institutions 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), Nationwide Building Society, NatWest Group (including RBS and Ulster Bank), Santander UK, TSB, and Virgin Money UK.
