Major banks told to improve access to basic accounts after FCA finds poor service
The Financial Conduct Authority has told nine major banks and building societies to improve access to basic bank accounts after a mystery shopping exercise found widespread poor pr
By BBC News
Some of the UK’s biggest banks and building societies have been told to improve the way they offer basic bank accounts after a regulatory review found customers were often given poor or unsuitable service.
The Financial Conduct Authority carried out 298 mystery shopping exercises across bank branches and telephone services.
It found that 34% of the experiences were rated poor or very poor, while only 28% were considered good or very good. The remaining 38% were rated fair.
Basic bank accounts are intended for people who may not qualify for a standard current account or who do not already have access to banking services.
They offer essential features such as receiving wages or benefits, paying bills, using a debit card and withdrawing cash, but do not include an overdraft.
The accounts must also be free for standard banking operations.
The FCA found that staff did not consistently tell eligible customers that basic accounts were available.
This included people experiencing financial hardship, customers without standard identification documents and those with no fixed address.
In some cases, people in vulnerable circumstances were directed towards online-only applications that were unsuitable for their needs.
The regulator said banks should identify vulnerability earlier, offer alternatives to digital-only applications and make it easier for people without standard identification or a permanent address to open an 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 Royal Bank of Scotland and Ulster Bank * Santander UK * TSB * Virgin Money UK, now part of Nationwide Building Society
All nine have agreed individual improvement plans and a collective commitment to raise standards.
The FCA said providers must offer customers the right account at the first attempt, explain options clearly and remove unnecessary obstacles from the application process.
Emad Aladhal, the FCA’s director of retail banking, said bank accounts were an important part of financial inclusion and that people who could benefit from basic accounts should not miss out because of poor service.
The regulator said it would monitor the banks to ensure the agreed improvements were delivered.
More than 97% of UK adults have a current account, according to the FCA’s Financial Lives survey.
However, around 900,000 adults remain unbanked, while 4.3 million people hold a basic bank account.
Of the 1.3 million adults who recalled applying for a basic account in the two years to May 2024, 10% said their application had been rejected.
HM Treasury figures separately show that just over seven million basic bank accounts were open across the nine designated providers at the end of June 2024.
That figure includes accounts which may not have been actively used.
Having access to a bank account can be essential for receiving wages, pensions and benefits, paying rent and household bills, and managing money safely.
People without an account may face extra difficulty finding work, renting a home or avoiding expensive cash-based services.
Applicants should ask specifically about a basic bank account if they have been refused a standard current account.
A bank may still refuse an application in certain circumstances, including where opening the account would be unlawful or where the applicant already has access to a suitable current account.
Where an application is refused, the provider should explain the reason in writing where legally permitted and tell the customer how to complain.
The FCA’s findings do not suggest that every basic account customer receives poor treatment.
However, the regulator said the results showed that standards were too inconsistent and that people most in need of straightforward banking services were sometimes facing the greatest barriers.