Do people who mourn the passing of bank managers like Mr Mainwaring (who presided over a branch in Walmington on Sea when he wasn’t commanding the local Dad’s Army platoon) have a point? Although he was pompous.he understood the idea of duty and he applied it to looking after other people’s money as well as to defending his country.
Clearly today’s banking environment has changed beyond recognition in comparison with what it was 70 or so years ago. Whatever we think of them we need bank accounts to receive wages, to pay bills and to manage our money. Those who do not have a bank account are at a disadvantage. This used to affect people on a low income disproportionately. In the late 1990s the proportion of low income households without a bank account was in the range 20-25%. By 2008-9 this figure had fallen to 5%, largely due to the emergence of Post Office card and Basic accounts. If, as many would argue Post Office card accounts should be omitted because what they can be used for is so restrictive the number of low income houses without a bank account in 2008-9 was 11%
Citizens Advice campaigned for the introduction of Basic bank accounts which are intended to give people who have a poor credit rating or are on a low income, access to banking facilities. Basic Accounts allow direct debits to be set up, access to hole in the wall machines and making payments by cheque. No overdraft facility is provided however.
Bar a couple of exceptions, anyone should be able to open a basic account. Past credit problems – including County Court Judgement, defaults, or having been declared bankrupt in the past year – are usually not a barrier. However, applicants with a history of criminal convictions for fraud may be turned down (though this doesn’t apply to everyone with a criminal record – many banks have worked with prisoners to give them access to accounts in the past).
For some people, it is currently difficult to open a basic bank account. People are often turned down due to branch ID requirements or because of past financial difficulties. Even people who have a Basic account can find it difficult to access their cash, depending on the bank involved.
In the short term, this makes it harder than it should be for a large number of people to manage their finances. In the long term it can make it harder to accept a job – it’s difficult to receive wages if you don’t have a bank account – and it means that people on low incomes often miss out on the best utility deals which are much cheaper if paid by direct debit.
Citizens Advice is therefore campaigning to ensure everybody is able to open a Basic bank account, irrespective of their financial circumstances. Good availability and standards in basic bank accounts will be essential when the changeover of means tested benefits to Universal Credit begins.later this year
Our campaign is calling for:
- banks to agree to a set of minimum standards for provision of Basic bank accounts including the features the accounts have and how the accounts are promoted to customers
- identification requirements in bank branches not to create barriers which prevent people from opening a Basic bank account
before the roll out of Universal Credit.