Why's opening a current account such a big deal?

auslaender

Hi

I have been lurking in this forum for about 2 weeks while trying (unsuccessfully) to open a bank account and now I am !!!!ed off. I need an outlet and maybe some of you can chime in. Most of people here have problems getting a "decent" bank account because of their credit history. I wonder why are the two related as long as there's no overdraft.

But, my story is a bit different. I have not had any credit/debt/loan/overdraft in my life. I came to UK some months back and opened an account with Barclays within two days of arrival. I got a VISA debit card and cheque book. Mind you I didnt have a job at that time. But, the banker (bless him) was impressed enough with my past credentials. I kept on depositing/withdrawing money but the account always had at least 100 pounds balance (so no overdraft or anything). I even a got a call in early December to open a savings account with Barclays (they thought my balance was good enough for savings!). At the start of this year, I moved to a different town to start a new job. I duly notified Barclays about change of address.

About three weeks back, it turned topsy turvy. Bank rejected a card transaction while I was paying for my groceries. I left my groceries (embarrassing enough) and walked straight into a Barclays branch. I was told that I was being demoted to VISA Electron (as someone here calls it Mickey Mouse Kids card) and the banker ordered a new Electron card / pin. The next day I got a letter (note it was dated a few days before my card was rejected) informing me of closure of bank account (after a review) with immediate effect. Within an hour of receiving the letter, I was in the branch and got my balance of bit more than 1000. The cashier had a puzzled look (my guess is she didn't see any closure notification on the screen but order of a new card). Yes the mickey mouse card was sent a few days after closure of account.

- Can anyone take a guess what the heck happened with Barclays ?

Since then I have applied to 3 banks (HSBC, Citibank, Halifax) to get a 'No'. Why - go and ask Experian. I have ordered a credit report and it should arrive sometime next week. It may hold the key but I can't wait. I am puzzled.


- The HSBC banker suggested the unfavorable credit reference may have to do something with my new place. It's a house share with live-in landlord. Even if he hasn't paid any bills etc, can I be held responsible? For the record, my name hasn't appeared on any bills at the the two places I have rented. There has not been any tenancy agreement signed either.

- The other banker said it maybe because my name is not there in the electoral roll. I have come to know that I can get on electoral roll and can even interfere (i.e. vote) in your democratic set up. All this because I am a citizen of commonwealth country. Wow I can vote (though I don't intend to) in your parliamentary elections but can't get a decent bank account.

Yesterday, I went to a Yorkshire branch and have got an appointment 15 days from now!! I will try a branch in a nearby town. I went to a Llyods branch to open a basic account. Their procedure calls for a credit check even for a basic account. The banker even suggested that I may get an account with a VISA debit card (I won't fall for that). I refused to have credit check done...too many imprints on the report.

Yorkshire is my last bet (based on what I have read on this forum though my hopes are not high). If this doesn't turn out good, I will be left with no option but go for an account with cash card.

Which banks don't do credit check before opening basic accounts ? I don't want further imprints.

HSBC will open a basic account (and I have already been screwed there vis-a-vis credit check) but the only branch/cash machine is some miles away from my place. What about Nationwide ? Do they do a credit check before opening a basic account ?

Any suggestions / insight into the diabolical cesspool of credit checks & bank account that I have got sucked into for no fault of mine ?

And if something sinister has appeared on that credit report what will I do to get it removed? Oh gosh it will be such a f***ing pain-in-the-a**.

If you are still reading, thanks.

khurammm

auslaender wrote:

Hi

I have been lurking in this forum for about 2 weeks while trying (unsuccessfully) to open a bank account and now I am !!!!ed off. I need an outlet and maybe some of you can chime in. Most of people here have problems getting a "decent" bank account because of their credit history. I wonder why are the two related as long as there's no overdraft.

But, my story is a bit different. I have not had any credit/debt/loan/overdraft in my life. I came to UK some months back and opened an account with Barclays within two days of arrival. I got a VISA debit card and cheque book. Mind you I didnt have a job at that time. But, the banker (bless him) was impressed enough with my past credentials. I kept on depositing/withdrawing money but the account always had at least 100 pounds balance (so no overdraft or anything). I even a got a call in early December to open a savings account with Barclays (they thought my balance was good enough for savings!). At the start of this year, I moved to a different town to start a new job. I duly notified Barclays about change of address.

About three weeks back, it turned topsy turvy. Bank rejected a card transaction while I was paying for my groceries. I left my groceries (embarrassing enough) and walked straight into a Barclays branch. I was told that I was being demoted to VISA Electron (as someone here calls it Mickey Mouse Kids card) and the banker ordered a new Electron card / pin. The next day I got a letter (note it was dated a few days before my card was rejected) informing me of closure of bank account (after a review) with immediate effect. Within an hour of receiving the letter, I was in the branch and got my balance of bit more than 1000. The cashier had a puzzled look (my guess is she didn't see any closure notification on the screen but order of a new card). Yes the mickey mouse card was sent a few days after closure of account.

- Can anyone take a guess what the heck happened with Barclays ?

Since then I have applied to 3 banks (HSBC, Citibank, Halifax) to get a 'No'. Why - go and ask Experian. I have ordered a credit report and it should arrive sometime next week. It may hold the key but I can't wait. I am puzzled.


- The HSBC banker suggested the unfavorable credit reference may have to do something with my new place. It's a house share with live-in landlord. Even if he hasn't paid any bills etc, can I be held responsible? For the record, my name hasn't appeared on any bills at the the two places I have rented. There has not been any tenancy agreement signed either.

- The other banker said it maybe because my name is not there in the electoral roll. I have come to know that I can get on electoral roll and can even interfere (i.e. vote) in your democratic set up. All this because I am a citizen of commonwealth country. Wow I can vote (though I don't intend to) in your parliamentary elections but can't get a decent bank account.

Yesterday, I went to a Yorkshire branch and have got an appointment 15 days from now!! I will try a branch in a nearby town. I went to a Llyods branch to open a basic account. Their procedure calls for a credit check even for a basic account. The banker even suggested that I may get an account with a VISA debit card (I won't fall for that). I refused to have credit check done...too many imprints on the report.

Yorkshire is my last bet (based on what I have read on this forum though my hopes are not high). If this doesn't turn out good, I will be left with no option but go for an account with cash card.

Which banks don't do credit check before opening basic accounts ? I don't want further imprints.

HSBC will open a basic account (and I have already been screwed there vis-a-vis credit check) but the only branch/cash machine is some miles away from my place. What about Nationwide ? Do they do a credit check before opening a basic account ?

Any suggestions / insight into the diabolical cesspool of credit checks & bank account that I have got sucked into for no fault of mine ?

And if something sinister has appeared on that credit report what will I do to get it removed? Oh gosh it will be such a f***ing pain-in-the-a**.

If you are still reading, thanks.

I had the same problem like you when I shifted to UK some months ago from an other EU country. I couldnt get a bank account as I didnt have a proof of address.
I sorted that out by getting a BT phone line on my name so that I could use the bills as proof of address. I also got my self registered on the electoral roll and with a credit reference agency.
Then after reading the threads on citibank in this site I applied for it and luckily got accepted and got a Visa debit card and chequebook. I didnt apply for the overdraft though.
When I applied for citibank current account I also applied for the halifax easycash account and I got accepted for that too and was given a Visa electron card with it.
Nationwide do credit checks on all their accounts including the basic flex account therefor I sugest you to open a halifax easycash account or a yorkshire ready cash account. You get a Visa electron debit card with easycash and a Maestro debit card with readycash. Both the halifax and yorkshire bank dont do any credit checks for their basic accounts.
Hope that this info will help you a bit.

Beate

Auslaender, your name suggests you are German, as am I. It is a common known problem for anyone from another country that opening a bank account in the UK can be a right nightmare, due to the fact that a) often enough you don't have a proof of address yet and b) nothing will show up on you on any credit history as you are new to the country. You really need to get on the electoral roll ASAP and try to get a utility bill in your name. Pop over to the http://www.deutsche-in-london.net/forum/ Deutsche in London forum, if you are not a member already, where dozens of people are talking about the same problem. Apparently, it can depend on what mood the bank manager is in that day whether you get an account or not. Some people have been rejected by one branch, only to be welcomed by another from the same bank somewhere else. Some had to show utility bills and the lot, others just a letter from their employer. I was lucky back then as I came to this country as a student and banks LOVE students, probably thinking they will get into lots of debts so make them lots of money. I have now changed banks last year without any problem whatsoever (intending to open another bank account soon as well).

Good luck!

huggychair

auslaender wrote:

Most of people here have problems getting a "decent" bank account because of their credit history. I wonder why are the two related as long as there's no overdraft.

Yes It is indeed a crazy state affairs when it seems that a bank doesn't want your money! That's how they make their £billions of profit after all (by investing it)!!:o

The thing is banks have become greedier and greedier of late in the UK. Over the past 5-10 years there's been mergers and acquisitions galore. Hundreds of branches have been closed and sold to be turned into what appear to be mainly wine bars/pubs:rolleyes: 'rationalization' they call it!

More importantly the number of 'brands' has decreased, and so too competition to win and retain customers.

Only the 'right kind' of customers will largely do now so that the share/stake holders can sleep happily at night knowing they have accepted 'only the best kind' of customer to start their 'banking journey'.

They'll only accept people with whom they'll likely be able to upgrade account of to a one that charges a monthly fee and be able to offer complimentary financial products to ie. Credit cards/insurance.

Fees and kickbacks are now a big part of banking revenue. So much so that when many people started (mainly due these forums) claiming back overdraft/returned payment fees

(see here: http://forums.moneysavingexpert.com/forumdisplay.html?f=102 )

which are illegally high the banks would have us believe they were hard up!! :rotfl:...So much so that some of them are now starting to make standing charges for basic accounts!

So maybe that's (really) why they're now routinely credit scoring people who open basic accounts!
A: They want the kind of customer who will be able to pay a standing charge
B: They want the kind of customer who may 'overlook' stupidly high overdraft charges, or at least won't get caught in the 'credit trap' they produce prompting them to be passionate enough to claim them back!

(As You can tell I'm in the same boat as You at the moment!:rolleyes::D..Deep Breath)

auslaender wrote:

And if something sinister has appeared on that credit report what will I do to get it removed? Oh gosh it will be such a f***ing pain-in-the-a**.

Write to the organization that put it there and dispute it, then contact the credit agency to take it off
Its easier said than done of course! but there's some real knoledgable people over on this board:

http://forums.moneysavingexpert.com/forumdisplay.html?f=76

should you need them.

Ps. T.J wetherspoon accept visa electron!;):rolleyes:

:cool: :A

masonic

huggychair wrote:

So maybe that's (really) why they're now routinely credit scoring people who open basic accounts!
A: They want the kind of customer who will be able to pay a standing charge
B: They want the kind of customer who may 'overlook' stupidly high overdraft charges, or at least won't get caught in the 'credit trap' they produce prompting them to be passionate enough to claim them back!

...or it could just be that

A: They want the kind of customer who isn't into identity theft/money laundering/fraud.
B: They want the kind of customer who isn't going to run up debts and be unable to pay them back.

huggychair

masonic wrote:

...or it could just be that

A: They want the kind of customer who isn't into identity theft/money laundering/fraud.
B: They want the kind of customer who isn't going to run up debts and be unable to pay them back.

Exactly! a credit check is involved if you want to know WHO is going to pay their bills on time (I accept this concept whole hearted..(inhale)):rolleyes:
I'm not a banker nor either of Karl Marx or Thomas Moore..but...

NO! because a BASIC bank account does not provide any credit or the NEED for a credit check whatsoever, and provides the banks (reading 'BANK') with funds to do with what a bank's core business deals with which is re-investing peoples money and making billions in (profit) during the process... Ie. 'They will moan when the kettle is cold'

Additonally with regards to the payment cards offered by the 'best' basic bank accounts; The company's that issue these cards deal with dozens of banks Europewide and Internationally respectively and see no problem issuing similar cards in OTHER countries regarding instant electronic verification of funds on basic bank accounts.

The Original poster (OP) allowed me to delve into the international (or at least Europewide) perspective here with the introduction of chip 'n pin (by all means see a previous post of mine on this issue where I mentioned 'mikey mouse')

So where UK banks were issuing these cards good for basic bank accounts previously, along with the OP's 'overseas' bank, the UK arms seem to be 'withdrawing' from that ambition in many ways.

Recently the OP's attempts at rendering a basic bank account in the UK with 'super-thrill' card on a basic bank account (remember the exhaustive FSA regulated proof involved..NOT credit checks) fell on cold water.

Not wishing to <borrow> from any of the above (at least two) authors I have mentioned, I would categorically say <internationally> that that the thing most people will see in their day-to day business with regards to banking is a debit card, If they can't see this and have to concentrate on ONLY direct debits/ standing orders, then to 'use' the words of 'Mr. T.' 'I pity that fool!':rolleyes:
(oscar season)

all good stfuff.. yes?

<anyway> I hope This helps some peeps!:money:

:cool: :A

Ps.: MI5 checklist: Are you an activist?...NO [x]

masonic

huggychair wrote:

NO! because a BASIC bank account does not provide any credit or the NEED for a credit check whatsoever
<rant snipped>

If basic bank accounts do not allow you to set up direct debits then you are correct, but I thought they did. If you have a zero balance and a direct debit bounces, then it is surely possible to go into unauthorised overdraft owing to fees?

That aside, I thought it was a legal requirement to carry out a credit check (albeit an unrecorded enquiry) under the anti money laundering regulations, regardless of whether a credit facility exists.

auslaender

Thank you all for your inputs & musings.

I feel a bit peeved and puzzled because I had a bank account as soon as I arrived in UK and then it was closed. But, my situation is better than those who have been enduring it for years as I have seen elsewhere on this forum.

Khurammm:
When you say that you registered with a credit agency - did you inform them about your registeration on electoral roll? I thought (and still think) that they get records every month and update their database on their own. I don't have a problem with proof of address. I have got my bank (now ex) statements - Perhaps, the problem lies with my new address. Will wait for my report.

Beate: Why can't I be Austrian or Swiss? I know a bit of German...aber nuer ein bisschen. Ich bin Inder. Und danke schoen fuer hyperlink. Gut fuer meine Deutsch praxis.

Huggychair :
This is what I thought - the banks are not interested in people like me - who will NOT buy their loan, debt, mortgage and insurance (insurance is nothing but volutary blackmail). No wonder they ask crappy questions - are you single? kids? own your house? They are looking for potential slaves - people with liabilities and fetters who can be milked as much as possible. So, do a credit check to weed them out.
And no wonder HSBC has got something called a 'passport account' for newbies to UK. It's a contract for a year for 50 pounds or 5 pounds/month. Only in this country they can get away with it. Who the hell is going to pay that elsewhere?

Masonic:
Money-laundering regulations require proof of ID and address. You need not do credit check for it. My objection is that application for a bank account is leaving an imprint on credit report when I am not looking for credit. The application for a bank account should be treated differently.
But you also got overdraft. Apparently, the banks can not prevent transactions (say through a debit card) even if the account doesn't have sufficient funds. I find no reason why the right technology (it's simply writing the right software) can't stop overdraft. But, the banks have a vested interest in people going overdraft so that they can extract 'overdraft fees'.


All this shouldn't be that painful as it is. I know the banks have got the discretion. I mean bank account without a VISA/MasterCard/ Maestro etc debit cards. Come on..this is a developed country. I don't think any American bank offers anything but VISA or MasterCard debit card. No they don't have cash card or such at all. They give a check book as well. But, US banks don't give any interest (0% current,0.25% regular savings).

What's the situation in Europe? Do they refuse to open bank accounts or offer accounts without a proper debit card?

masonic

auslaender wrote:

Masonic:
Money-laundering regulations require proof of ID and address.

Yes, and the anti money laundering check on your credit file serves that purpose. It's much more convenient than getting documents certified (normally for a fee) and sending them off by post.

auslaender wrote:

My objection is that application for a bank account is leaving an imprint on credit report when I am not looking for credit.

An anti money laundering check will not leave an imprint on your credit file.

I think you need to be sure that your file was subject to a full search before assuming so. Some searches are not recorded.

auslaender wrote:

But you also got overdraft. Apparently, the banks can not prevent transactions (say through a debit card) even if the account doesn't have sufficient funds. I find no reason why the right technology (it's simply writing the right software) can't stop overdraft. But, the banks have a vested interest in people going overdraft so that they can extract 'overdraft fees'.

This technology currently exists in the so-called 'mickey mouse kids' cards you described above, which are normally issued to people under the age of 18 (who cannot be held liable for the debts they create). Banks have no choice when dealing with them. That's why they fob these cards off onto anyone else they are not prepared to risk giving access to any form of credit.

Beate

auslaender wrote:

Beate: Why can't I be Austrian or Swiss? I know a bit of German...aber nuer ein bisschen. Ich bin Inder. Und danke schoen fuer hyperlink. Gut fuer meine Deutsch praxis.

You can be anything you like! I was just working on the assumption that you used the German word for "foreigner" as your user name, that's all.

khurammm

Beate wrote:

You can be anything you like! I was just working on the assumption that you used the German word for "foreigner" as your user name, that's all.

What did he say to you in German? hehe