Nationwide, Barclays, HSBC, NatWest and Lloyds change to bank accounts

The move follows an investigation by the Financial Conduct Authority (FCA) which found many people who should have been offered a basic bank account were instead being turned away, directed to unsuitable online applications or not told the accounts existed at all.

Basic bank accounts are designed for people who cannot qualify for a standard current account, including those with poor credit histories, financial difficulties or no fixed address.

The FCA said they are vital for receiving wages, benefits and paying household bills, yet its investigation uncovered widespread poor practice across the industry.

One in three banking experiences rated poor

The regulator carried out 298 mystery shopping exercises at bank branches and over the phone.

It found:

• 20% of experiences were rated poor
• 14% were rated very poor
• Just 28% were rated good or very good
• 38% were rated fair

Investigators found bank staff often failed to mention basic bank accounts early enough, overlooked signs of customer vulnerability and frequently pushed people towards online applications that were unsuitable for their circumstances.

People without standard identification or a fixed address were among those most likely to face barriers.

Around 4.3 million UK adults currently have a basic bank account, but the FCA estimates around 900,000 people remain completely unbanked.

Which banks are changing?

Following the FCA’s findings, the UK’s largest banks and building societies have agreed to improve how they offer basic bank accounts.

They include:

• Barclays
• The Co-operative Bank
• HSBC
• Lloyds Bank
• Halifax
• Bank of Scotland
• Nationwide Building Society
• NatWest
• Royal Bank of Scotland (RBS)
• Ulster Bank
• Santander
• TSB
• Virgin Money

The firms have committed to:

• Offer customers the right account first time
• Make opening an account easier for people without standard ID or a fixed address
• Better identify vulnerable customers
• Provide alternatives for people who cannot complete online applications

FCA issues warning to major banks

Emad Aladhal, director of retail banking at the FCA, said: “Progress has been made with over 97% of UK adults having a current account, but our latest work shows that all too often banking firms’ engagement with customers still needs improvement.

“Bank accounts are important for financial inclusion, and this is about making sure the very people who could benefit from basic bank accounts are not missing out.

“That’s why the biggest banks have now committed to improving how they are offered – and we’ll be holding them to account to make sure change happens.”

Peter Tyler, director of personal banking at UK Finance, said: “A basic bank account can be an important first step towards financial independence, and while most customers who hold one have positive experiences, we recognise that more can be done to ensure consistently good outcomes for everyone.

“That is why UK Finance and our members are committed to raising industry standards and expanding access.

“The recently expanded ‘breaking the cycle’ initiative is a key part of this work, providing practical support to those facing barriers to accessing essential banking services, such as individuals without a fixed address.”

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Who can get a basic bank account?

A basic bank account is intended for people who:

• Have been refused a standard current account
• Have a poor credit history
• Have been declared bankrupt
• Do not have a fixed address
• Do not have standard forms of identification
• Need an account to receive wages or benefits and pay bills

Unlike standard current accounts, basic bank accounts do not offer an overdraft, helping customers avoid borrowing while still giving access to everyday banking services.