The UK's biggest banks have pledged to improve access to basic bank accounts after the Financial Conduct Authority (FCA) found that too many people were not being offered the accounts they were entitled to. The watchdog secured commitments from major banks and building societies to enhance how basic bank accounts are offered, particularly to those facing financial hardship, lacking standard identification, or in vulnerable circumstances.
What Are Basic Bank Accounts?
Basic bank accounts provide essential banking services, allowing people to receive wages, benefits, and other payments, as well as pay bills and make purchases. Unlike standard current accounts, they do not offer an overdraft. Under the Payment Accounts Regulations 2015, the UK's largest current account providers must offer basic bank accounts to people legally resident in the UK who either do not have an account or are not eligible for a standard current account.
FCA Findings: Poor Customer Experiences
The FCA's review found that firms were not consistently informing customers about basic bank accounts early enough in the application process, and some eligible customers were not offered them at all. A mystery shopping exercise involving 298 interactions in bank branches and over the phone revealed that around a third of customer experiences were rated poor or very poor. Some customers were directed to online applications unsuitable for their needs, and staff often failed to recognize when individuals were vulnerable or required extra support.
Commitments from Banks
To address these issues, banks and building societies have agreed to individual improvement plans. UK Finance, the banking industry body, secured a wider commitment from firms to improve access. Under the plans, banks pledge to offer customers the right account the first time, communicate more clearly, and make it easier for people without standard identification or a fixed address to open an account. They also committed to identifying vulnerable customers earlier and offering alternatives to online-only application processes when appropriate.
Impact on Financial Inclusion
The FCA reported that over 97% of UK adults had a current account in 2024, but around 900,000 people remained unbanked. Approximately 4.3 million adults currently hold a basic bank account. Emad Aladhal, director of retail banking at the FCA, said: "Progress has been made with over 97 per cent 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."
Banks Required to Offer Basic Accounts
The banks and building societies legally required to offer basic bank accounts include Barclays, Co-operative Bank, HSBC UK, Lloyds Banking Group, Nationwide Building Society, NatWest Group, Santander UK, TSB, and Virgin Money UK.
