Minimum standards for basic bank accounts essential for consumers
2 November 2012
Gillian Guy, Chief Executive at national charity Citizens Advice said:
"Citizens Advice has long called for a minimum standard for basic bank accounts so Consumer Focus is right to urge the industry to provide this.
"Basic bank accounts are a vital product for the poorest – opening the door for financial inclusion and giving them a safe way to manage their money and get wages from their employer.
"As it stands, these accounts are on a slippery slope. Recently some banks have eroded what they offer and who they offer it to. We believe all banks should offer a basic bank account that provide essential services – like a debit card, using the counters at banks and access to the LINK cash machine network - to help people get on with their daily lives and manage their money sensibly."
In the Citizens Advice report ‘Access to cash – don’t bank on it’ (July 2012), we called for basic bank accounts to provide the following minimum standards:
- access to the entire LINK cash machine network
- unrestricted bank branch counter access
- the ability to deposit and withdraw money from the Post Office network, as well as to check account balances
- a debit card to give greater sense of inclusion, enable use of cashback and allow account customers to make purchases on the internet or phone
- a buffer zone*
- limits on level and incidence of charges, including some form of overall cap
- assistance when opening the account about ‘making the most of the account’ (for example, considering whether to set up direct debits and how to time the payment of these)
- eligibility criteria with minimal exclusions.
*A buffer zone is essentially a very small temporary overdraft of around £10 or so. The idea is to ensure account customers still have access to their cash via a cash machine which dispenses £10 notes if they only have, say, £6 in their account.
Citizens Advice report ‘Called to account’ (July 2010) exposed the experiences of undischarged bankrupts who are explicitly excluded as customers by almost all banks, also noting a worrying move to exclude people with DROs as well, with banks simply treating these people as if they were undischarged bankrupts.
Notes to editors:
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