UK banks commit to better basic account access

Nine major UK banks and building societies have committed to improving access to basic bank accounts, following an FCA mystery shopping exercise that revealed widespread poor practice. The firms often failed to offer these essential, fee-free accounts to vulnerable customers.

A third of interactions rated poor

A mystery shopping exercise conducted by the Financial Conduct Authority (FCA) revealed that one-third of interactions regarding basic bank accounts were rated as poor or very poor.

These accounts are legally mandated for nine of the biggest UK banks and building societies to ensure access to essential, fee-free services for individuals who may not qualify for standard current accounts, particularly those without an overdraft facility.

The FCA found that providers were not consistently offering these accounts to eligible customers, including those facing financial hardship, lacking standard identification, or without a fixed address.

Firms frequently failed to mention basic bank accounts altogether, instead directing vulnerable individuals towards online application processes that were unsuitable for their specific needs.

This systemic failure highlighted significant barriers for the very people these accounts are designed to support, underscoring a gap in financial inclusion efforts despite over 97 percent of UK adults having a current account.

New commitments for inclusion

To rectify these shortcomings, the nine banking institutions have agreed to implement individual improvement plans.

In collaboration with UK Finance, a collective commitment has been secured from these firms to enhance customer engagement.

Key pledges include providing the right account for customers from the outset, ensuring clear communication, and minimizing friction in the application process.

They also committed to making it straightforward for customers lacking standard identification or a fixed address to open an account, a critical barrier for many vulnerable individuals.

Furthermore, firms will enhance their ability to spot vulnerability early and offer accessible alternatives to online-only application journeys, which often prove unsuitable.

Emad Aladhal, director of retail banking at the FCA, emphasized that these accounts are crucial for financial inclusion, stating, 'this is about making sure the very people who could benefit from basic bank accounts are not missing out.'

Peter Tyler of UK Finance added that while most customers have positive experiences, more can be done to ensure consistently good outcomes.

A long overdue necessity

This intervention by the FCA is a long overdue necessity, addressing a clear failure in basic financial provision for vulnerable segments of society.

While the commitments are welcome, their true impact will hinge on rigorous enforcement and a genuine shift in banking culture beyond mere compliance.

The persistent number of unbanked adults and declined applications highlights that this is merely a foundational step, not a comprehensive solution to financial exclusion.