Select Committee on Treasury Minutes of Evidence

Memorandum submitted by HSBC Bank Plc


  At the hearing of 14 May, which I attended along with Chief Executives from other high street banks, I was asked how HSBC fostered the sale of its basic account. In the course of questioning we were all then asked to write to the members of the Committee to explain our policies in this regard.

  As with many other product lines the extent to which "promotion" takes place will depend upon many factors, the only common one being that similar products on offer from different banks will be promoted in different ways. For instance my colleagues at the hearing have all expressed already that their basic accounts are promoted in a variety of ways, from partnerships with community groups to Credit Unions.

  HSBC does not choose to advertise its "Basic Bank Account" specifically and it is true that neither do we have any partnership arrangements with external groups. In this the basic account is not unique. Our philosophy, which extends across the majority of our product range, is that we first seek information to discover a customer's needs, then, and only then, do we attempt to find an appropriate product to fulfil those needs.

  Within HSBC we have a range of Current Accounts and within our branches we display a brochure giving details of them including the basic account. When a prospective new customer approaches us to open a bank account we make no pre-judgements. We seek the normal range of information and this would include provision of satisfactory identification and documents to verify an address. An assessment of all the information is then made to discern what product may best suit the customer. Each product has a range of features, some of which include the eligibility to obtain credit either in the form of an overdraft or via a credit card. Our basic account has no "credit" features and if no other account is suitable then a basic account will be offered and its features explained. We believe that this is the most open method of providing a current account to suit the individual circumstances and needs of a potential new customer.

  I would also like to comment on the recent survey from the Financial Services Consumer Panel referred to in the hearing since this was a catalyst for questioning. The survey used only a very small sample of 16 "mystery shoppers". 12 of those 16 obtained a bank account with more functionality than a basic account and have professed themselves happy with it. However, on the basis of this evidence the survey chose to criticise the banks for not offering basic accounts to those "mystery shoppers" as a first (and only) option. I have to say I find this extraordinary unless the survey has formed the view, for whatever reason, that lower income groups are simply not able to manage their financial affairs and have, at all times, to be protected with a "no overdraft" account.

  In closing, I would say that since our own Basic Bank Account was launched towards the end of 2000, HSBC has opened around 50,000 accounts. The British Bankers Association will confirm that more basic accounts were opened by the industry in 2001 than in any previous year. In addition, HSBC, along with its fellow participants in Universal Banking Services, will make its basic account available to those benefit claimants who need a bank account when benefits are automated next year.

22 May 2002

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