Basic bank account standards at risk

| November 2, 2012 | 0 Comments
Basic bank account standards at risk

Consumer Focus, the statutory consumer champion, is calling for a minimum standard for basic bank accounts to be introduced, to ensure the survival of the product.

Basic bank accounts are used by people who are unable to open a regular current account, perhaps because of a poor credit history.

It is estimated that they are used by around 20 per cent of the UK population.

There are about 20 basic bank accounts available, and while they allow people to pay their bills by direct debit, pay-in cheques and have their salary paid into their account, they do not offer overdrafts and there is no monthly fee.

Some may offer a debit card with limited facilities and customers can withdraw cash from some cash machines or from the Post Office.

In its Best of British Banking report, Consumer Focus claims that although basic bank accounts have been a success, more banks are reducing what these accounts offer, in an effort to cut costs.

The Royal Bank of Scotland Group, which includes RBS, NatWest and Ulster Bank, recently joined Lloyds Banking Group in stopping basic bank account holders from using the LINK ATM network, and Barclays is now the only bank which offers accounts to undischarged bankrupts, after the Co-operative Bank stopped offering this service earlier this year.

Mike O’Connor, Chief Executive at Consumer Focus said: “A bank account is an essential product in the modern world.

“The last thing these consumers need is a race to the bottom between banks which keep chipping away at the features these accounts offer.

“Without intervention these accounts could become less useful or more expensive for low income consumers.”

Meanwhile, RBS and NatWest are reducing the number of paper account statements they send out to customers through the post.

Unless they opt back into the system, RBS and NatWest current account customers will receive their paper statement quarterly rather than monthly.

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