Supplementary memorandum by HBOS
BASIC BANK
ACCOUNTS
As you know, we have been working with the British
Bankers Association to make sure the Committee and the Financial
Inclusion Taskforce have accurate and up to date figures on social
banking.
I am now writing with some more detail around
the figures that we sent to you in January of this year.
At the end of Q1 2006 we had over three million
social bank accounts. We estimate this gives us a market share
of 56%. HBOS is the largest player in this market by some margin.
Our Commitment to Social Banking
HBOS operated two social banking accounts, Cardcash
and Easycash, for many years before others in the industry joined
the market and long before the Government announced its target.
The total number of social bank accounts, Easycash and Cardcash,
that we have opened from April 2003 to April 2006 is 693,862.
Below is the table that shows these openings on a quarterly basis,
including Q1 2006.
| HBOS social bank
accounts opened
|
| Q2 2003 | 76,838 |
| Q3 2003 | 110,901 |
| Q4 2003 | 93,637 |
| Q1 2004 | 99,259 |
| Q2 2004 | 89,848 |
| Q3 2004 | 98,199 |
| Q4 2004 | 67,256 |
| Q1 2005 | 16,337 |
| Q2 2005 | 8,438 |
| Q3 2005 | 7,238 |
| Q4 2005 | 10,195 |
| Q1 2006 | 15,716 |
Our Easycash account is Post Office accessible. The table
below shows the number of Easycash accounts we have opened in
each quarter since 2003—122,407 accounts.
| | Easycash Openings
|
| Q2 2003 | 1,634 |
| Q3 2003 | 4,300 |
| Q4 2003 | 4,018 |
| Q1 2004 | 8,579 |
| Q2 2004 | 12,081 |
| Q3 2004 | 16,927 |
| Q4 2004 | 16,944 |
| Q1 2005 | 16,337 |
| Q2 2005 | 8,438 |
| Q3 2005 | 7,238 |
| Q4 2005 | 10,195 |
| Q1 2006 | 15,716 |
In 2005 we simplified and consolidated our social banking
product range and now concentrate on Easycash sales with Post
Office access. Unfortunately, the transition to Easycash did not
go as smoothly as we would have liked and our social banking sales
declined from Q1 2005. We were not happy about this and took steps
to increase our sales.
As you can see from the table above, we increased our sales
in the first quarter of 2006 and achieved an estimated market
share of 11%, in line with our share of the current account market.
We aim to maintain this share throughout 2006.
Going forward, we will be focussing on our Easycash sales.
However, we firmly believe that the combination of our Cardcash
and Easycash sales over the last 20 years represent a substantial
contribution to the social banking market.
BANKING CODE
STANDARDS BOARD
MYSTERY SHOPPING
EXERCISE ON
BASIC BANK
ACCOUNTS
Banking Code Standards Board Report
We welcomed the findings of the Banking Code Standard Board's
mystery shopping exercise in basic bank accounts and received
a green audit. I have set out below how we are addressing the
four potential obstacles to opening social bank accounts that
the BSCB identified in the report that they published on basic
bank accounts in November 2005. A number of these issues will
be in the new banking code guidance which will be effective in
October 2006.
1. Availability of Account Literature
Information on our social bank account, "Easycash",
is given the same prominence as that for other accounts. All branches
display our Easycash brochure and application pack. There is also
a section about Easycash in our current account leaflet which
is displayed in branches. In addition, our website has a page
dedicated to Easycash.
The requirement for equal prominence of basic bank account
literature will be in the new banking code guidance.
2. ID Requirements
Our application pack clearly sets out the ID requirements.
Accepted documents range from a passport to a local council tenancy
agreement.
Because we have a central team who handle Easycash applications,
we have been able to swiftly reduce our ID requirements for Easycash
applicants in line with new money laundering guidelines. Social
banking customers are the first customers to benefit from these
changes which will be rolled out to other customers this year.
One photocopy of a passport, a travel document issued by the Home
Office or an ID card (for non-UK nationals) is sufficient.
If an applicant sends insufficient ID, our central team refers
them to a branch where they can have their ID verified and photocopies
can then be sent to the team.
3. Account Opening Timescales
The average time for opening our Easycash account is 7 days,
the same as a full current account. A standard 10-day timeframe
for basic bank account openings will be in the new banking code
guidance.
4. Credit Searches
We only decline social banking applicants if they have a
fraud conviction or are an undischarged bankrupt. We carry out
credit searches to check this information but we do not use credit
scores as part of our application process.
We are currently in the process of changing the type of search
we do so that we do not leave a "footprint" on an applicant's
credit file. This will be complete by the end of October 2006.
Our new financial inclusion initiative
HBOS is providing over £1 million of backing for financial
and social inclusion specialists A4e. Following successful pilots
in Edinburgh and Halifax, this investment will help deliver two
major programmes, one for adults and one for 16 year olds. The
programme focuses on workshops that educate participants on the
benefits of having a bank account and teach basic financial management
such as budgeting.
The schemes will be rolled out from 1 June in areas chosen
because of their high levels of financial and social exclusion,
as measured by the ODPM. These areas are Glasgow, Edinburgh, Newcastle,
Leeds, Halifax, Sheffield and Edmonton.
ATMs
As you know, we have been working to improve ATM transparency
and will be working with the new Working Group on issue. I am
also please to tell you that will be adding an extra 300 cash
machines to our Halifax network over the next five years. All
of these machines will allow free cash withdrawals.
May 2006
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