Memorandum submitted by The Royal Bank
of Scotland Group
Each of our two principal bank subsidiaries,
The Royal Bank of Scotland plc (RBS) and National Westminster
Bank Plc (NatWest) offer basic banking accounts. The RBS "Key
Account" was launched in August 1999 and NatWest offered
the "Step Account" in October 2000. Hence RBSG was the
first of the "Big Four" to offer such facilities. As
stated at the evidence session, the combined number of accounts
presently stands at approximately 200,000 and new accounts have
been opening recently at approximately 8,000 per month. In addition,
as recently noted by the Bank of England,
RBS/NatWest are the only banks to offer the equivalent of the
personal basic banking account to businesses. There are at present
in excess of 31,000 of these accounts open across RBSG.
RBS has promoted its personal basic banking
Having literature on the account
available in each of its branches.
Undertaking a joint mailing to 25,000
Scottish Power customers.
Developing an arrangement through
Working Links, a public/private company supported by Employment
Services, Manpower UK Ltd and Cap Gemini Ernst & Young, set
up to help people find and keep jobs in areas of high unemployment,
to open accounts for the long-term unemployed. Approximately 7,000
accounts have been opened through this source.
Having an on-going arrangement with
the New Deal scheme, the Government's initiative to move people
from benefits through appropriate training and transfer them into
the active workforce, to allow clients to open Key Accounts. Approximately
1,000 accounts have been opened through this source.
NatWest promotes its equivalent basic banking
Initially publicising the launch
of the account through a national television campaign over the
Christmas period in 2000 at a cost of £1.3 million.
Having literature available in each
of its branches as part of the overall customer offering.
Discussions are at a very late stage with the
DTI, to publicise Step/Key accounts via Post Offices as part of
the government's social inclusion agenda and the resulting Universal
Banking Services initiative. This will enable social security
benefits to be paid electronically and individuals to use Post
Office branches as well as bank branches to withdraw their cash
from their Step/Key accounts. RBSG has recently signed a contract
with the Post Office in this connection and the proposed start
of this service is April 2003. This is likely to result in a significant
increase in uptake of Step/Key accounts.
In addition the banks are providing the financial
support for the development of the Post Office's own account (entitled
Card Account at the Post OfficeCAAPO). RBSG is contributing
£30 million over five years.
RBSG has promoted its business basic account
Being a keen supporter of the Government's
New Deal Self Employment Scheme, opening accounts for New Deal
participants starting up their own new businesses under the Scheme.
Having a proactive dialogue with
the Department of Education and Skills to expand the New Deal
scheme to those participants with adverse credit bureau data held
Supporting Business Debtline, aimed
at helping the self-employed and small businesses to obtain free,
confidential and independent advice from high quality specialists
without having to go to a bank first.
Being a lead sponsor in Inner City
100, now in its second year. This supports the Government's drive
to open up enterprise in challenging environments.
We were also asked at the hearing what initiatives
were in place to convert individuals using basic accounts to standard
accounts. Within RBS there has been a programme to identify individuals
holding basic accounts who we believe could be eligible for full
accounts. The selection was based on those individuals who were
likely to pass the relevant credit scoring criteria. As a result
approximately 10 per cent of the basic account customer base,
were invited to apply for full accounts by their branches. Of
these about 400 customers, or approximately 8 per cent of those
approached, converted to standard accounts. This programme will
be replicated in the near future and may be expanded to NatWest
now that a longer history of performance on these accounts is
We do not distinguish in our marketing between
basic accounts and our standard accounts. Individuals seeking
to open a basic account, often qualify for a standard account
and are offered that product.
The provision of basic accounts and support
for the Universal Banking Service are not the only initiatives
through which RBSG seeks to support the community. Other initiatives,
specifically the "Face2Face with Finance" financial
education programme in NatWest, also increase awareness of banking
products and how to use them and hence increase the number of
people holding bank accounts.
Face2Face With Finance has been a successful
secondary schools programme aimed at teaching personal money management
and enterprise skills within the curriculum. To date, over 50
per cent of secondary schools in England and Wales have taken
part and almost 300,000 students have participated. The initiative
will be extended to RBS later this year.
RBSG is also recognised by the Government and
the banking industry as leader in the field of Community Development
Banking and has eight years of practical experience of working
with people in low-income communities. RBSG supports a wide variety
of development activity covering the not-for-profit sector, community
and social enterprise, community businesses, credit unions, microcredit
and social investment, and community finance. For example:
RBSG is the only banking group to
have a network of dedicated regional social investment funds,
targeting areas historically associated with market and public
sector failure. We continue to be the lead participant in the
development of a socially directed intermediary banking sector
for the UK (ie acting as a catalyst for the provision of finance
to "viable, but not bankable" activities. This relates
mainly to the not for profit sector and to self employment, micro
enterprise and marginal small business activity in disadvantaged
communities). RBSG is also the founding supporter of most Community
Development Finance Institutions in the UK.
RBSG is one of the key funders of
the Bridges Community Venture Fund which was recently launched
by the Chancellor to provide access to capital for growth companies
in disadvantaged areas and has provided £20 million to invest
in Regional Venture funds in Objective 2 areas. RBS has provided
initial capital for Social Investment Scotland to develop a new
source of lending for social enterprise in Scotland.
Because of RBSG's expertise, RBSG
is often requested to act in an advisory capacity by a wide range
of public, voluntary and community sector bodies with an interest
in community development and regeneration. Some recent examples
of our involvement with current government initiatives/programmes
are given in Appendix 1.
RBSG is also closely involved with and supports
financially a number of organisations whose primary mission is
social, economic and environmental development. A list of organisations
with which we are connected is given in Appendix 2. Of particular
interest is the close relationship with The Prince's Trust which
provide start-up funding and loans to businesses run by young
people. In addition to providing grant support and business mentors,
NatWest has agreed a £6 million loan facility for the Trust
to support its business start-up programme.
RBSG runs an extensive outreach programme
of seminars and conferences in deprived communities to encourage
local people to consider more entrepreneurial methods of tackling
poverty rather than traditional grant dependent approaches.
With the support of the Secretary
of State for Trade and Industry, RBSG also runs the national social
enterprise award programme Enterprising Solutions.
RBSG is also the largest corporate
supporter of the Money Advice Trust which has developed a training
programme to ensure that high quality money advice is available
through agencies across the whole of the UK.
We trust that this letter will give the Committee
an understanding of our approach to basic accounts and, more generally,
the ways in which RBSG supports the community.
9 July 2002
5 Finance for Small Business Report May 2002. Back