Basic Bank Account Thread

Old_Wrinkly

benoit wrote: »

They spoke to the Information Commissioner about Banks doing credit checks for basic accounts with no overdraft or cheque book & they said the banks shouldn't really be doing that ...

Was there any indication that the IC was going to do something about it?
As I rather thought that it's their job to police things like that ...

Dannydebt

I have a Barclays Cash Account and I have setup Standing Orders for £21 and I will make sure I always have £21 in it, but do I need to have extra in it to make sure they are paid, so have say £22 in it and never let the balance go to £0 or would they still pay £21 out if I had £21 in ?, as I don't want to leave anything extra in if I don't need to.

benoit

Old_Wrinkly wrote: »

Was there any indication that the IC was going to do something about it?
As I rather thought that it's their job to police things like that ...

They advised that customers should challenge the bank because they are not asking for a credit facility & to refer the bank to the IC guidelines which state they should not perform a credit search for a basic account.

1. Opening an account

CAB clients experience particularly acute problems opening bank accounts because they may not have acceptable evidence of their identity and address, which banks must check to comply with money laundering legislation.
Although there is government guidance ablout have financially excluded people can prove their identity and address, CAB clients find that bank staff are frequently not willing to follow it. Our evidence reveals that the people who are most affected include discharged prisoners, non-UK citizens, people on benefits and homeless people.
Other difficulties include:

• Few banks promote their basic bank account, causing particular problems for the most excluded who may lack the confidence to ask for information, or may not even be aware of the existence of basic bank accounts.
• Instead of offering a basic bank account some bank staff sell accounts and services which may not be suitable for customers' needs. This runs counter to the Banking Code, which sets standards of good banking practice, and now states that people should be offered a basic account if they ask for one.
• Although it is not possible to go overdrawn with a basic bank account, only a few banks allow people in debt to open accounts. As a result they cannot manage their income or make repayments to creditors.
• People are experiencing long delays opening basic accounts with some banks, as the relevant processes are carried out centrally rather than at local branches. Such delays can leave people without any income for up to several weeks.
• Banks are sometimes upgrading basic accounts to full current accounts with overdrafts where this may not be in an individual's best interests.

2. Using an account

CAB evidence suggests that access to banking is not enough to bring people into the financial mainstream; the design and features of both basic and current accounts are also important.

• Banks can take money out of basic and current accounts to pay other debts to the bank without checking the customer's circumstances first. This is called the right of set-off, and there is no limit on the amount a bank can take. This practice has major implications, particularly where Housing Benefit is paid into an account, as rent arrears and even eviction could result.
• Charges levied by banks for items such as failed direct debits can also cause considerable hardship. Most banks even levy charges on basic accounts ranging from £15 to a staggering £39 for a failed direct debit. A £39 charge for a failed direct debit could leave someone on jobseekers allowance with less than £20 per week.
• Some banks provide a poorer service to basic account holders, taking up to 10 days to clear a cheque through some basic bank accounts. Other banks are preventing basic account holders from withdrawing cash at a bank branch counter.

Recommendations

All banks should review their existing basic bank accounts against the following principles:

• no use of credit scoring
• accounts should be opened on the spot, provided the customer has acceptable forms of identification
• banks should not exercise their right of set-off from basic bank accounts.
• charges for failed direct debits and standing orders should be set at a level to be determined by the government's Financial Inclusion Task Force
• the provision of a buffer overdraft zone of £10
• accounts should be accessible at post office counters, ATMs and bank branch counters
• the clearance time for cheque payments into accounts should be the same as for the bank's current accounts.

The Banking Code should require banks to:

• display information about basic bank accounts in bank branches
• tell customers who have been turned down for an account the reasons for the refusal, and what they need t do to remedy the situation
• open a basic bak account where acceptable ID is provided, and to set it up, within a maximum of 10 working days
• stop exercising their right to set-off other debts to the bank from basic accounts
• follow guidance on how basic accounts should be upgraded, and the safeguards that should be put in place.

In addition, we also recommend that:

• A single list of acceptable documents to prove ID and address should be produced, drawing on existing best practice. This must include letters of entitlement to Housing Benefit, official Home Office travel documents and residence permits. The list should be communicated clearly to all bank branch staff.
• All current account holders should be able to withdraw cash over the counter at Post Offices.
• The Office of Fair Trading should investigate the level of charges for failed direct debits on basic bank accounts to ensure that charges are not disproportionate but reflect the costs incurred by the banks.
• The national rollout of Housing Benefit reform should not start until difficulties with opening and using bank accounts for payment of local housing allowances have been resolved.
• The Financial Inclusion Task Force should commission a report to outline the business case for banks to actively offer bank accounts to people on low incomes.

Social Policy contact: [EMAIL="tony.herbert@citizensadvice.org.uk"]email Tony Herbert[/EMAIL] or [EMAIL="francesca.hopwood-road@citizensadvice.org.uk"]email Francesca Hopwood-Road[/EMAIL]

• Banking benefits ( 420kb)

• Banking benefits summary ( 46kb)

• Banking benefits - welsh summary ( 46kb)

benoit

Interestingly they also recommend that banks should not excercise the right to offset from a basic account. Wonder how many banks do that?

premierfella

Dannydebt wrote: »

I have a Barclays Cash Account and I have setup Standing Orders for £21 and I will make sure I always have £21 in it, but do I need to have extra in it to make sure they are paid, so have say £22 in it and never let the balance go to £0 or would they still pay £21 out if I had £21 in ?, as I don't want to leave anything extra in if I don't need to.

The standing orders will be paid as long as there is £21 in the account on the working day before they are paid out. If the standing orders are the only things coming out of the account that will work fine, but bear in mind that running the account in that way it only takes you to forget to pay in the £21 on one occasion before you fall back into the charges and cancelled standing orders position so you really must make sure the credits are in there in a timely fashion.

paulasx

quick update, after applying yesterday morning for a barclays cardcash account and being told my application was being referred to the credit risk team, and i should have a decision within 5 hours, it is now 30 hours and I havent heard anything. Im guessing this is not good news and i am still without an account I think I am now going to have to go down the route of opening a 'managed' account, and pay for the privilege of having direct debits. I have tried getting my credit report, even that said it needed to do further checks and they would email me with log in details, but im still waiting!!
Does anyone have any idea what could be so wrong that i am getting turned down for everything, im beginning to think some poor soul has decided I am the perfect person to clone, and this has resulted in fraudulent activity, but I dont even know if this is what it means by fraudulent activity???
Im also starting to think that it may be easier in the long run to pay for a passport and this may help?
any suggestions please xx

book12

paulasx wrote: »

quick update, after applying yesterday morning for a barclays cardcash account and being told my application was being referred to the credit risk team, and i should have a decision within 5 hours, it is now 30 hours and I havent heard anything. Im guessing this is not good news and i am still without an account I think I am now going to have to go down the route of opening a 'managed' account, and pay for the privilege of having direct debits. I have tried getting my credit report, even that said it needed to do further checks and they would email me with log in details, but im still waiting!!
Does anyone have any idea what could be so wrong that i am getting turned down for everything, im beginning to think some poor soul has decided I am the perfect person to clone, and this has resulted in fraudulent activity, but I dont even know if this is what it means by fraudulent activity???
Im also starting to think that it may be easier in the long run to pay for a passport and this may help?
any suggestions please xx

Just wait for a reply. It might be good news in the end..

In the long run, pay for a driving licence, as it's cheaper. If you are willing to spend a bit more, pay for a passport.

Have you tried other banks yet?

paulasx

Have been turned down by RBS, yorkshire bank didnt even have the courtesy to get back to us, halifax asked for further id, which is what happened with RBS who then turned me down after further checks, so i dont know if it is worth sending the docs in, if they are all doing credit checks my file will be worse than ever! have been reading up on things and it looks like it may be worthwhile paying £10 to cifas just to see if there is anything flagged which may be the problem, due to my husbands work we are in our 3rd house in 6 years, although we always register on the voters list as i am a staunch believer in using your vote for good, and we have always notified utility companies etc of the move so we can continue to receive the services.
we cannot go to natwest as we challanged their charges in 2005 and they subsequently closed our account, citing our breach of terms i.e. going overdrawn a couple of times, namely when my husband lost his job, had a short period of jobseekers which was paid into the step account but not always on time, hence our going into the red or bounced dd!
I have just sent for an application form for a managed account, it will cost 12.50 to set up, and 17.50 per month if we want a second card, but it does allow dd and so, so we will save a little on things such as cable which charges an extra £5 monthly as we dont pay by dd!
again, any suggestions, hints and advice is welcome, and i will keep you all posted on the barclays situation - i am thinking of challenging the decision if its a no on the grounds of why did they credit score/check me when im not applying for credit!

davethorp

paulasx wrote: »

Have been turned down by RBS

SNIP

we cannot go to natwest as we challanged their charges in 2005 and they subsequently closed our account, citing our breach of terms i.e. going overdrawn a couple of times, namely when my husband lost his job, had a short period of jobseekers which was paid into the step account but not always on time, hence our going into the red or bounced dd!

That's probably why RBS are turning you down as natwest is owned by RBS

Lloyds TSB or Co-op also offer basic accounts with debit cards and may be worth a look. Failing that santander or HSBC do them with just a cash card. With the news from the budget this week concerning basic accounts there really is no reason that you shouldn't be able to get one somewhere and not one of the expensive managed accounts

paulasx

I have just looked at copies of my credit report from experian and equifax, although i have no CIFAS flags, ccjs, bankruptcy, gone aways or ivas, they do show defaulted accounts from nearly 6 years ago. My electoral roll is up to date, however i do have an account which shows i am a couple of months behind in payments - this is a doorstep loan and the reason i am behind is the agent regularly fails to turn up; i didnt realise this was reported on here, so i am going to contact the company and tell them each time she doesnt call, and hopefully this will improve. The only other thing i can see is my catalogue, although completely up to date since i opened it, is showing a balance of 196 when my limit is 200. it is not showing my last payment which reduced the balance by a lot; could this affect anything?
my only alias's are my name now and my maiden name, although there are 12 records showing! and i am only linked to my husband
could these old defaults be the reason i am getting turned down for bank accounts?:(