Member Article

Gloom for Low-Income Consumers over Basic Bank Accounts?

Today, Consumer Focus expressed concerns over the future of basic bank accounts, suggesting that a minimum standard was needed to ensure their survival.

One in five UK adults uses such accounts as their main or only account. Typically used by those with less than favourable credit histories, they allow customers to have wages, benefits and cheques paid in, whilst granting access to funds through the Post Office and selected cash machines.

After RBS, Lloyds Banking Group and NatWest withdrew access for basic account holders to Link ATMs, the Treasury Committee has looked for reassurance that such access would not be more widely restricted.

The minimum standard suggested by Consumer Focus in its attempt to prevent further restrictions includes; full ATM and Post Office counter access, buffer zones to cover small overdrafts, free electronic payments and debit card use and no fees for unpaid charges.

Although there are around 20 basic bank accounts on the market, when one bank makes restrictions, others have tended to follow suit – highlighting a need for the most vulnerable consumers to be protected by such minimum standards.

With the immediacy of universal credit looming over those who are already struggling financially, without intervention these accounts could quickly become less beneficial and leave customers facing unreasonably high potential charges. This would in-turn increase the likelihood of such low-income individuals seeking out other solutions to short-term financial difficulties – such as payday lenders, to whom we are vehemently opposed.

On a more positive note, similar to moves made by Barclays, HSBC and Santander earlier this year, the Treasure Committee has been guaranteed that the Bank of Ireland, Clydesdale and Yorkshire Banks, the Co-op and Nationwide have confirmed they have no plans to restrict ATM access for basic bank account holders.

We just hope that this is a sign of things to come, and that similar assurances to those given to the Treasury Committee can be given to Consumer Focus; it is both unfair and unnecessary to punish those who struggle the most with their finances.

This was posted in Bdaily's Members' News section by MyMoneyPA .