Bank accounts play a pivotal role in the financial health of individuals.
An estimated 1.87 million adults in the UK don’t have a transactional bank account, many more are “under-banked”. Meaning that their account does not fully meet their needs and/or leaves them financially worse off. Recent data showed 43% of new bank account holders continue to manage in cash, either due to fear of fees and charges or because the account couldn’t offer the same flexibility as cash. The same data also shows that many of the unbanked and newly banked previously had a bank account, highlighting the risk that inappropriate products lead to revolving door exclusion. The way banks implement identity requirements is still preventing some of the most vulnerable consumers from accessing an account so they can move on in their lives.
Having a bank account helps people to access other products and services such as affordable credit, insurance, and savings accounts. It can also help people access cheaper tariffs and discounts on other essential services. Not having a bank account can create barriers to gaining employment and receiving benefits. Those without access to appropriate banking products and services can be subjected to a poverty premium of up to £1,300 a year.
We work with financial services firms, the financial services regulators, and the government to ensure that banking is accessible and appropriate for all consumers. Our priorities include:
- establishing pricing structures for bank charges that are proportionate to flows through accounts
- creating payment mechanisms that enable consumers to prioritise and flex timing of payments in line with their income flow and outgoings
- enabling all consumers (especially vulnerable consumers) to drive competition through exercise of choice
- ensuring that all consumers are able to access banking services in whichever way they choose
- creating a customer service environment that is focused on understanding and meeting a customer’s needs
- having a transparent banking system that enables consumers to make complex decisions about their products and services
In the video below, Sian Williams, our Head of National Services talks about how the nature of household finances are changing as the employment market shifts from permanence we know as normal, towards shorter-term and ever-changing conditions such as the increase in zero-hour contracts and self-employment. With these changes comes a need for a more flexible payments systems that gives consumers the power to balance their expenditure against their actual income flow.
Find out more about how we are influencing and shaping policy to create more inclusive banking.