15th December 2014
In response to today’s announcement by HM Treasury that a new fee-free template for basic bank accounts will be introduced, Mike O’Connor, chief executive of StepChange Debt Charity, said:
“Not having a bank account means that you are locked out of the best deals which are only available via direct debits. Being outside the banking system contributes to the poverty premium where the poor pay up to 10% more for basic services. Therefore we welcome the Government setting a minimum standard for basic bank accounts. Without standards we saw the functionality of these accounts being reduced by some banks in a race to the bottom as the simple fact is that providing basic bank accounts is not as profitable as providing accounts to the more well off. We hope some banks will provide more than the minimum standard and we will see the number of unbanked reduce.
“The experience of our clients is that access to basic bank accounts is extremely sporadic across the sector, and things like high charges and limited access to cash machines can cause real problems on a day-to-day basis. This move will give hope to the millions of people who currently feel locked out of the banking system, and help them to regain control of their finances.
“Many people fall into debt through unexpected life events, and it should not be that they are then hit with disproportionate charges that risk turning a temporary financial struggle into a more serious cycle of debt.
“However, signs of financial difficulty should not be ignored. We would urge banks and those across the credit sector to do more to recognise when people are falling behind on their essential bills and credit commitments, and signpost them to free independent debt advice as early as possible.”
Find out more on basic bank accounts.