Banks slammed over basic accounts

Banks need to stop treating basic account applicants like "second class citizens", an influential group of MPs said.

Basic bank accounts were introduced to encourage greater financial inclusion for people who do not qualify for a standard bank account.

They allow customers to benefit from services such as direct debit and access to ATMs but prevent them from going overdrawn.

Since April 2003, around 1.97 million basic bank accounts have been opened in the UK.

But a recent mystery shopping exercise found that some providers failed to provide sufficient literature or advice to consumers or made it difficult for customers seeking to open basic accounts.

The Treasury Committee report, Banking The Unbanked, reported that steady progress had been made towards the target of halving the number of people without access to a bank account.

But it added that banks needed to "redouble their efforts" to tackle the problems that many people still encountered when trying to open basic accounts in high street branches.

Speaking following the publication of the report, committee chairman John McFall MP said: "A basic bank account is often an essential stepping stone to full financial inclusion for many people in society.

"It helps them to gain legitimate employment, manage any debt they have and become accustomed to financial products."

But he added: "Some basic bank account applicants receive short shrift at bank branch counters. Treating basic bank account holders like second class citizens by denying access to branch counters causes exclusion and reduces the opportunities for holders to become further integrated with the financial services sector."