BASIC BANK ACCOUNTS

 

The Government is changing the way in which people receive their state benefits.  On a phased basis, from April 2003, the three million benefit recipients who do not currently have their benefits paid into a bank account will have to switch from order books which can be cashed at Post Office counters.  Their benefits will need to be paid through  an existing bank account, through one of the new Basic Bank Accounts developed by banks and building societies or through a Post Office Card Account

 

Basic Bank Accounts come with different names, but they all have similar features.  Benefits and other credits can be paid into the accounts; cash can be withdrawn across the counter and at ATMs; direct debits are available, but not cheques or overdrafts.  People with a poor credit history can usually open them.

 

The Banking Code refers specifically to these accounts.  ‘Before you become a customer, we will … give you information on a basic bank account if we offer one and it would appear to meet your needs.’

 

In July 2002, we conducted a survey to assess whether banks and building societies were ready to meet the expected demand for Basic Bank Accounts.  The survey revealed some shortcomings which needed to be corrected before the main changeover started.  We made a number of recommendations as to what needed to be done.

 

A further survey was carried out in June 2003 (click here to view).  We used NOP to conduct 170 ‘mystery shops’ in 15 banks and building societies.  The main findings were:

 

The survey was carried out only two months after the transfer of benefit payments to bank accounts, an initiative which is being rolled out over two years. We have made a number of recommendations to individual institutions and their trade associations.  We will carry out further mystery shopping in the future to review progress.

 

For information on the Basic Bank Accounts that are available, click on: http://www.bba.org.uk/public/consumers/5128