The research and campaigns department recently conducted a piece of research into the provision of basic bank accounts. National Citizens Advice commissioned this work and it was a follow-up survey to one completed in 2016.
In 2016, the Payments Accounts Regulations implemented the EU Payment Account Directive and as a result the major retail banks and building societies in the UK agreed with the Treasury to provide new basic bank accounts to “consumers in financial difficulty”. This legal requirement expects “designated credit institutions” to reduce financial exclusion, particularly to people in debt or who are undischarged bankrupts , by:
- Offering an account to anyone legally resident in the EU providing:
- They don’t have another account or are unbanked
- They are ineligible for all the banks’ other current account products
- Not charging fees for transactions in sterling on basic accounts
- Not providing overdraft facilities for a basic account
- Providing access to basic account holders for counter services and ATMs in the bank and its partners
- Allowing basic account holders to manage their account both online and in branch.
In the UK, the “designated credit institutions” are Barclays, Co-operative bank, HSBC, Lloyds (including Halifax and the Bank of Scotland), Clydesdale & Yorkshire Bank, the Royal Bank of Scotland (including NatWest and Ulster Banks), Santander, TSB and the Nationwide Building Society.
I visited nine banks and building societies  in Bath and spoke with their managers, asking them all the same questions. I was up-front about being from Citizens Advice and that I was collecting information to enable us to give advice to our clients.
The questions addressed what kind of ID and proof of address was required and how the bank decides which account is appropriate given the circumstances of the person applying. All the banks and building societies accepted a wide range of documentation from someone in order to prove their identification and proof of address. Some examples are their passport, driving licence or student ID. Otherwise any documentation detailing the person’s NI number such as a letter from the HMRC or benefits entitlement letter and a utility bill dated within the last three months or a council tax bill for the year.
In deciding which account is best suited to a potential customer, all of the banks and building societies said they facilitated a credit check as part of the application process. The score determines which accounts the customer is eligible for and the customer then makes their choice. They were all very keen to stress that they do not give advice to their customers.
All the banks and building societies confirmed that their basic bank accounts were offered to people in the following scenarios:
- Someone who is an undischarged bankrupt or was recently approved for a debt relief order (DRO).
- A person who has recently arrived to work in the UK from another EU member state who needs a bank account. They speak little English. They are on a low income and in receipt of in-work benefits and want a bank account that cannot go overdrawn.
- Someone who has been asked by government to open a transactional bank account to receive benefits. They previously used a Post Office Card Account.
- Someone who often uses their authorised overdraft and has debts to organisations other than your bank.
However it would be harder for a person who has an unauthorised overdraft and other debts to the bank. This would be subject to approval by the bank manager. Also, it is important to note that if someone has had a debt written off by a bank then they will not be offered another bank account with any other banks within that banking group.
Whilst all the banks and building societies I spoke with gave the impression that they would discuss the option of a basic bank account to the people who need them most, my main observation is that the process is not always transparent and is more complicated than it needs to be. For example, not all the banks and building societies call their basic bank account by this name. TSB call theirs a cash account.
Likewise not all of them proactively promote these accounts. NatWest said to me, “we do not advertise our basic bank accounts but would offer it if someone does not qualify for our current account” and the Co-op said, “we rely on the customer telling us what they want”.
It is clear to Citizens Advice that our clients, especially those on low incomes or in debt, value having a bank account which can help them manage their money effectively without getting into debt. It seems to me the banks and building societies could do more to promote and offer basic bank accounts to the people, by providing consistent and forthcoming information, so those in need are in a better position to make an informed choice.
 Bankruptcy law was also changed in October 2015 to remove the barrier to banks offering undischarged bankrupts current accounts.
 Barclays, CO-OP, HSBC, NatWest, Santander, Royal Bank of Scotland, Halifax, TSB and Nationwide.
Tanya Reid May 2018