Created to help vulnerable people who have had issues with personal debts or who have low incomes, basic bank accounts have been a lifesaver for many who haven’t got a firm grasp of how to manage their finances effectively. However, a consumer watchdog has shed light on how many banks and building societies are starting to withdraw this service and restrict access to some ATMs for customers with basic accounts.
Consumer Focus claimed that one in five people own a basic account, many of which were opened over five years ago, and that 20 of these products are currently available. However, banking chains that offered such products including the Co-op have withdrawn, while others including RBS, Lloyds Banking Group and NatWest have removed access to Link cash machines for their basic account holders.
Basic bank accounts are seen as being ideal for anyone who wants to use them for simply receiving wages and/or benefit payments. However, the fact that the issues of access and whether banks want to continue providing them to new customers who have had money troubles in the past is something that concerns Will Becker from credit card comparison site totallymoney.com . He said:
“We applaud Consumer Focus' efforts to maintain the quality of services provided by basic bank accounts. Since it is loss-making for banks to provide these accounts, there are clear incentives for banks to provide worse service, and that’s not fair on those players left standing. We’re looking to the government to revise legislation to mandate a level playing field to ensure that there’s continued provision of basic banks accounts at a decent standard.
“We only have to look at the swathes of “un-banked” customers in the US to see that provision of these accounts is undoubtedly a public good. These accounts offer a road to recovery for those who’ve had credit problems. Without them, it’s very hard for these customers to build any credit file even years after credit problems and without access to banking and credit products at reasonable rates, many of these customers will turn to more unsavoury alternatives.”