UK banks pledge to fix basic account access after FCA probe
Nine major UK banks have pledged to overhaul how they serve vulnerable customers after the financial regulator found systemic failures in providing basic bank accounts to those most in need.
The UK’s financial regulator has secured commitments from nine major lenders to overhaul how they provide basic bank accounts, after an investigation found widespread failures in serving homeless and financially excluded customers.
A mystery shopping exercise by the Financial Conduct Authority (FCA) reviewed 298 interactions across branches and telephone lines. It rated 28 percent of those experiences as good or very good, and 38 percent as fair. The remaining 34 percent were rated as poor or very poor.
Basic bank accounts are designed for the more than four million people in the UK who cannot open standard current accounts due to bad credit, bankruptcy or debt recovery plans. The products are free, do not include overdrafts, and allow users to receive wages and make payments via direct debits and debit cards. They are offered by institutions including Barclays, HSBC, Lloyds Banking Group, NatWest and Santander.
Despite these features, the FCA found bank staff routinely failed to offer the accounts to eligible customers. Staff also steered vulnerable individuals, particularly those without a fixed address, toward online applications for unsuitable mainstream products rather than using existing offline alternatives or charity partnerships.
For investors, the intervention highlights the growing regulatory and reputational risks surrounding financial inclusion. While basic accounts do not generate overdraft revenue, failing to provide them draws intense scrutiny from watchdogs and damages brand credibility. For pan-European lenders operating in the UK market, such as Santander and HSBC, the FCA's demands mean immediate operational adjustments to staff training and customer routing systems.
Under the new agreement, the nine banks and building societies must ensure customers are given the correct account on their first interaction. They also pledged to make it straightforward for individuals without standard identification or a fixed address to open an account, and to guarantee offline alternatives for vulnerable customers.
"Bank accounts are important for financial inclusion, and this is about making sure the very people who could benefit from basic bank accounts are not missing out," said Emad Aladhal, the FCA's director of retail banking.
Peter Tyler, director of personal banking at trade body UK Finance, acknowledged the industry shortcomings. "We recognise that more can be done to ensure consistently good outcomes for everyone," he said, pointing to existing industry partnerships with housing charity Shelter to help those with no fixed address.
