FCA Pushes UK Banks to Improve Access to Basic Bank Accounts

The Financial Conduct Authority (FCA) has secured commitments from nine of the UK’s largest banks and building societies to improve access to basic bank accounts following concerns about inconsistent customer service and barriers faced by vulnerable individuals.

The initiative aims to ensure that people experiencing financial hardship or lacking standard identification can more easily open and use basic bank accounts, supporting greater financial inclusion across the UK.

What Is a Basic Bank Account?

Basic bank accounts are designed for people who may not qualify for a standard current account. They provide access to essential banking services without monthly fees or overdraft facilities, allowing customers to receive income, pay bills, and manage their finances safely.

Nine of the UK’s largest banks and building societies are legally required to offer these accounts to eligible customers.

FCA Mystery Shopping Reveals Poor Customer Experiences

As part of its review, the FCA carried out a mystery shopping exercise to assess how banks were offering basic bank accounts to customers.

The results highlighted significant shortcomings, with approximately one-third of customer experiences rated as poor or very poor.

The regulator found that many banks failed to consistently inform eligible customers about basic bank account options, particularly those facing financial difficulties or challenging personal circumstances.

Barriers Facing Vulnerable Customers

The FCA identified several common issues that made it more difficult for vulnerable individuals to access banking services.

• Basic bank accounts were often not mentioned during customer interactions.
• People without standard identification faced unnecessary obstacles when opening an account.
• Customers with no fixed address encountered additional challenges despite being eligible.
• Some vulnerable customers were directed toward online-only application processes that were unsuitable for their needs.

These barriers can prevent individuals from accessing essential financial services, making it harder to receive wages, benefits, or manage everyday payments.

Banks Commit to Raising Standards

To address the FCA’s findings, the participating banks and building societies have agreed to implement individual improvement plans.

Working alongside UK Finance, the firms have also made a collective commitment to improve how basic bank accounts are offered and managed.

The agreed actions include:

• Helping customers open the most appropriate account the first time.
• Providing clearer information throughout the application process.
• Making it easier for customers without standard identification or a permanent address to open an account.
• Identifying vulnerable customers earlier and offering alternatives to online-only application journeys.

Supporting Financial Inclusion

According to the FCA, more than 97% of UK adults now hold a current account. However, the regulator believes further improvements are needed to ensure that everyone can access essential banking services regardless of their circumstances.

Emad Aladhal, Director of Retail Banking at the FCA, said that while progress has been made, banks must continue improving customer engagement so that those who would benefit most from basic bank accounts are not overlooked.

The FCA has confirmed that it will closely monitor the participating firms to ensure the promised improvements are delivered.

Industry Backs the Initiative

UK Finance has welcomed the industry’s commitment to improving access to basic bank accounts.

Peter Tyler, Director of Personal Banking at UK Finance, said that basic bank accounts can provide an important foundation for financial independence. He acknowledged that while many customers already have positive experiences, further work is needed to deliver consistently high standards across the industry.

Why This Matters

Access to a bank account is essential for participating in modern society. It enables people to receive salaries and benefits, pay household bills, and manage their finances securely.

By improving access to basic bank accounts and reducing barriers for vulnerable customers, the FCA and the banking industry aim to promote greater financial inclusion while ensuring that everyone has access to essential banking services, regardless of their personal circumstances.