The Financial Conduct Authority has announced that nine banks and building societies have committed to making significant improvements to basic bank accounts following a mystery shopping exercise that revealed they were not adequately supporting some of the most vulnerable customers.
FCA Mystery Shopping Reveals Gaps
The FCA's investigation found that account providers were not consistently offering basic bank accounts to customers who would benefit from them. Firms frequently failed to mention basic bank accounts altogether and steered vulnerable customers towards online applications unsuitable for their needs, the regulator said.
The nine institutions legally obliged to provide Basic Bank Accounts are Barclays UK, The Co-operative Bank, HSBC UK, Lloyds Banking Group (including Halifax and Bank of Scotland brands), Nationwide Building Society, NatWest Group (including RBS and Ulster Bank brands), Santander UK, TSB and Virgin Money UK (now a brand of Nationwide Building Society).
Commitments to Improve Access
The FCA confirmed that all nine banks and building societies have agreed to individual improvement plans and have worked with UK Finance to secure a collective commitment. The firms will: provide the right account for customers first time with clear communication and minimal friction; make it straightforward for customers without standard ID or a fixed address to open an account; and spot vulnerability early and offer accessible alternatives to online-only journeys.
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."
Industry Response and Next Steps
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."
Tyler highlighted the recently expanded Breaking the Cycle initiative, which provides practical support to those facing barriers to accessing essential banking services, such as individuals without a fixed address.
What Basic Bank Accounts Offer
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. Over four million people across the UK hold these accounts. Features include: accepting payments such as wages and benefits, and allowing account-holders to make payments through debit cards, direct debits and standing orders; being free, with no overdraft facility; being available to those with a bad credit history, who are bankrupt or have official debt recovery plans; and some access for homeless people, by working with charities to confirm identity.
The FCA said it will hold the banks to account to ensure the promised changes happen.
