Nine major British banking institutions have agreed to individual improvement plans after a Financial Conduct Authority (FCA) mystery shopping exercise revealed they consistently failed to offer basic bank accounts to vulnerable customers who needed them.
The regulator discovered that these firms frequently omitted any mention of basic accounts, instead pushing vulnerable individuals toward unsuitable online applications.
According to the FCA, more than four million people in the United Kingdom currently utilize these free, no-overdraft accounts, which accept wages and benefits for those with poor credit history or no fixed address.
Banks Commit to Improvement
The nine legally mandated institutions include Barclays UK, The Co-operative Bank, HSBC UK, Lloyds Banking Group, Nationwide Building Society, NatWest Group, Santander UK, TSB, and Virgin Money UK.
Working alongside UK Finance, the regulator secured a collective commitment from these firms to deliver appropriate accounts with minimal friction, simplify procedures for individuals lacking standard identification, and identify customer vulnerabilities early.
Retail banking director at the FCA, Emad Aladhal, highlighted that while over 97% of UK adults possess current accounts, institutional engagement requires significant enhancement to ensure essential banking access is not missed.
"Progress has been made with over 97% of UK adults having a current account, but our latest work shows that all too often banking firms’ engagement with customers still needs improvement.
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 Aladhal.
Aladhal added that the largest financial institutions have pledged to refine their distribution methods, and the regulator intends to enforce these commitments strictly.
"That’s why the biggest banks have now committed to improving how they are offered – and we’ll be holding them to account to make sure change happens," said Aladhal.
Personal banking director at UK Finance, Peter Tyler, acknowledged the necessity for industry-wide upgrades to secure positive outcomes across all customer segments.
"A basic bank account can be an important first step towards financial independence, and while most customers who hold one have positive experiences, we recognise that more can be done to ensure consistently good outcomes for everyone.
That is why UK Finance and our members are committed to raising industry standards and expanding access," said Tyler.
Tyler noted that their expanded Breaking the Cycle initiative serves as a core mechanism for delivering practical assistance to individuals facing severe barriers to standard banking services.
"The recently expanded Breaking the Cycle initiative is a key part of this work, providing practical support to those facing barriers to accessing essential banking services, such as individuals without a fixed address," said Tyler.
