FCA Criticises UK Banks

The Financial Conduct Authority (FCA) has criticised some UK banks for not helping customers in difficult situations.

The FCA found that some banks sent people who were homeless or struggling with money to applications that were not suitable for them. Instead, they should have offered basic bank accounts that better met their needs.

What Are Basic Bank Accounts?

Basic bank accounts are free to use and do not include an overdraft. They help people who cannot open a standard current account but still need access to essential banking services.

 Banks Agree to Improve Access

The nine banks and building societies that provide basic bank accounts have agreed to make it easier for customers to open these accounts.

 Services Offered by Basic Bank Accounts

Basic bank accounts provide many of the same features as regular current accounts. Customers can receive wages, benefits, and other payments. They can also use a debit card, set up direct debits, and arrange standing orders.

 Who Can Open a Basic Bank Account?

People with poor credit histories, people who have declared bankruptcy, and those on debt repayment plans can open these accounts.

 Support for People Without a Fixed Address

Some banks work with charities to help people without a fixed address prove their identity so they can open a bank account.

More than four million people in the UK use basic bank accounts. read more

 Banks Offering Basic Bank Accounts

The following banks and building societies offer basic bank accounts:

• Barclays
• The Co-operative Bank
• HSBC
• Lloyds Banking Group (including Halifax and Bank of Scotland)
• Nationwide Building Society
• NatWest (including RBS and Ulster Bank)
• Santander
• TSB
• Virgin Money

 Major UK Banking Providers

These financial institutions provide basic bank accounts to help more people access everyday banking services.

 FCA Mystery Shopping Results

The FCA carried out a mystery shopping exercise involving 298 visits and phone calls to banks.

 Customer Experience Ratings

The results showed:

The FCA rated 28% of customer experiences as good or very good. It rated 38% as fair, 20% as poor, and 14% as very poor.

The regulator also found that banks did not tell some eligible customers, especially people without a fixed address, about basic bank accounts.

New Promises From Banks

Some vulnerable customers were encouraged to apply for standard current accounts that were not suitable for their needs.

Easier Access for Vulnerable Customers

Banks have agreed to:

• Offer the correct account from the beginning.
• Make it easier for people without standard identification or a fixed address to open an account.
• Provide alternatives to online applications for customers who struggle with digital services.

 FCA and UK Finance Respond

Emad Aladhal, the FCA’s Director of Retail Banking, said bank accounts are important for financial inclusion. He said people who need basic bank accounts should not face unnecessary barriers. know more

 Breaking the Cycle Initiative

Peter Tyler, Director of Personal Banking at UK Finance, said banks can do more to improve customer support. He highlighted the Breaking the Cycle initiative, a partnership with the housing charity Shelter that helps people without a fixed address access banking services.