Memorandum submitted by the Financial
Services Consumer Panel
When I gave evidence to your Committee on 12
October 2004, John Mann asked me to provide evidence of low income
consumers having problems accessing bank accounts due to money
I said that Citizens Advice have experience
of this, and I understand that they are submitting a memorandum
to you separately with their up-to-date evidence.
I wanted to add that the Consumer Panel itself
undertook some qualitative research at the beginning of 2002,
on access to Basic Bank Accounts for low income consumers. It
was a qualitative research project, so was a small sample. Nevertheless,
the research showed that, of the 16 mystery shopping applicantsthe
majority with household incomes of less than £10,000 a yearnone
were offered a basic bank account. Of those who were refused any
account, three out of four were turned down because of unnecessarily
strict criteria on identification. I am attaching a copy of the
relevant section (para 4.2.9, pages 15-16) with this letter. The
full research is on our websitewww.fs-cp.org.uk/ct_research_consumer.html.
In addition, Money Advice Scotland is currently
preparing a report on access to bank accounts and indebtedness
in Scotland. As the Chief Executive of Money Advice Scotland,
Yvonne Gallagher, is also a member of the Consumer Panel, she
has kindly agreed that we can give you some of the information
in advance of the report's full publication in December. The key
points relating to identity requirements in opening bank accounts
are on the attached paper.
We hope that you and the members of the Treasury
Select Committee find this information useful.
Money Advice Scotland (MAS) undertook a questionnaire
survey among its Money Adviser members regarding the difficulties
that their clients had in opening bank accounts. The following
summarises the responses received by MAS from 37 Money Advisers
throughout the country and offer a useful insight into the problems
MAS researched the existing situation in terms
of the ease of access to bank account facilities for those people
who use the services of Money Advisers. The above table indicates
up to 50 clients per Money Adviser are refused bank account facilities
by banks per year. In certain circumstances, this figure rises
to over 70 per year and this represents a large section of the
community that is financially disenfranchised from mainstream
Upon further investigation, the typical client
types prevented from accessing bank account facilities were those
who, in the opinion of Money Advisers, faced the most financial
hardship. These groups included those who had previous diligence
undertaken against them, unemployed, bad credit history, those
on state benefits, bankrupted individuals.
The issue of whether clients excluded themselves
from opening bank accounts was then explored with the Money Advisers.
The above comments offer an insight into the level of client confidence
in the banking system meeting the needs of the client types while
also reflecting the way banks do business that is prejudicialpossibly
institutionally sotowards those in need of bank accounts
but who, for various reasons, are not allowed the benefits of
using the banking system. In essence, the comments offered by
the Money Advisers represent two sides of the same coin. Clients
will exclude themselves from opening bank accounts due to the
perceived attached risks and the fear factor of refusal, of banking
practices/procedures and of high charges that would erode their
Beyond the issue of perceived attached risks
of opening bank accounts, the message is clear that the established
banking practice for a client to provide acceptable forms of identification
is the most common problem. This would highlight a basic deficiency
in the knowledge and understanding by banks of the situation that
most clients are in or find themselves in. The range of situations
Lack of documents for the homeless,
some elderly or the poor who do not have a driving licence or
cannot afford a passport.
Where there is a marital/relationship
breakdown, the client may have a short history in the address.
Banks do not recognise or accept
other forms of ID eg travel documents, immigration documents or
Clients with power and gas payment
cards have no utility bills to supply residential ID.
There can be a problem when previous
debt is shown on bank statements.
It is also clear that banks need to either be
more flexible with their ID documentation requirements or improve
their publicity about the less rigorous ID required for basic
bank accounts which are more appropriate than conventional bank
accounts for these client types.
PANEL 15 APRIL
Despite several respondents raising concerns
about becoming overdrawn or spending too much money, some banks
clearly missed the opportunity to offer information on basic bank
She just asked me which account and when I
said the savers she just went and got the forms. With a current
account I was worried that with direct debits and everything I
would end up spending too much.
4.2.8 Whether offered an account
The level of success varied across respondents:
Four respondents were instantly turned
down with no options offered.
Three respondents were likely to
be able to open an account on provision of ID which should be
availabletwo requiring their passport (which will be available),
and one required to complete a form to join the electoral roll
(although this respondent took her passport, and couldn't understand
why she was not on the electoral roll).
Nine respondents successfully opened
accounts, with seven opening current accounts, and two opening
savings accounts, with the respondent choosing these accounts
because of their concerns about being overdrawn.
When it became clear that respondents had NOT
been offered basic bank accounts, the researcher prompted the
respondent by asking if the bank had mentioned any other types
of accounts which were more basic than the current accounts and
wouldn't allow them to become overdrawn. ALL claimed that no such
account was ever mentioned.
4.2.9 Reasons for being turned down
Amongst the four respondents who had their applications
rejected, two were refused on the basis of a lack of the necessary
They asked me for ID. The ID I could provide
was my marriage licence and my housing agreement. They weren't
enough. It was a driving licence or passport. Well l don't go
abroad and I don't drive. But they were the only two proofs of
ID they were willing to take, so that's it.
They said "Are you working?" I said
no, I'm looking for work now. "Any identification?"
I said I've got my medical card that's all I've got. They said
I need three forms of identification before they can do anything
for me. Like a driving licence, passport, birth certificate. Which
I haven't got.
On one case the respondent was rejected because
of a CCJ.
She turned the computer round and showed me,
and that's what come up, County Court Judgements. They said we
can't give you an account because of them CCJ's. You've got no
chance of opening one until these run off. I've got to pay them
off first and then I can open an account.
The remaining respondent, was not refused per
se, but was offered no alternatives to the references she
had been asked for and was unable to provide. This respondent
felt the member of staff was far from encouraging.
I just said to her I'd like a hole in the
wall account, no overdraft. Just so when I get cheques or if I
have got a bit of money I can put it all in there. She told me
to take the leaflet away with me. She couldn't wait to get rid
of me basically, you know I was just being a pain in the bum.
She didn't really say anything like "No we're not going to
give you one" but she did tell me it would be best to take
that home and read it. Basically it felt like she was saying don't
bother coming back, you're not having one.
Amongst those rejected there appeared to be
little hope of being able to open an account, as this experience
was most often not the first time they had been turned down.