Select Committee on Treasury Minutes of Evidence

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[5], 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 account through:

    —  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 account through:

    —  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 Office—CAAPO). RBSG is contributing £30 million over five years.


  RBSG has promoted its business basic account through:

    —  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 against them.

    —  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 available.

  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

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