Bank Accounts in Bankruptcy - UPDATE

alltaken

I promised a follow up on the current situation of bank accounts whilst in bankruptcy.

The best account for an undischarged bankrupt to open today is the Nationwide Flexbasic account. It offers contactless visa debit card and full online and mobile banking. The only basic account to do so. More are below.

Changes by way of an agreement made between HM Treasury and the major banks back in December 2014 meant that basic bank accounts from 01/12/2015 would have their terms changed to allow a large array of individuals facing financial hardship, undischarged bankrupts among them, access to a basic account.

Most banks have applied the agreement by way of changing account terms and the below now offer basic accounts to undischarged bankrupts:

Santander - Basic Account
Lloyds - Cash Account
Nationwide
Yorkshire Bank/Clydesdale
Co-op Bank
Barclays
Virgin
Metro Bank

(I'll update this list as I can and have much more to add, for now terms on sites are in turmoil to be frank and need updating, some have updated upfront eligibility to reflect insolvency is not a barrier whilst ignoring their full terms and vice versa.

Some of the above banks allowed insolvency already (Barclays for example), whilst others closed accounts upon learning of the bankruptcy.

As an aside for a few years people on these boards have always wondered why some people 'slip through the net' by this I mean that some bankrupts have managed to keep an account held at a bankruptcy hostile bank - Natwest as an example.

The answer I have obtained from them is that the account at Natwest, if in credit at the time of a bankruptcy order being made, will remain open. It is converted to a basic account. Not a drastic revelation but alas an affirmed answer from their own insolvency team as to why some people 'slip through the net'

Moving on, the agreement states that most UK banks are part of the agreement, however, some banks do not and have not applied the agreement in full. Everything in the agreement but the insolvency change has been adopted by them.

Natwest Foundation (Previously basic bank account)
HSBC
Halifax

Natwest like many others implemented the changes they needed to apply before the 01/12/2015 and whilst fantastic for anyone facing financial hardship, no fees for unpaid items like Direct Debits and forced overdrawn balances, bad news for undischarged bankrupts.

Natwest call centre team will tell you that you are eligible to open the foundation account as an undischarged bankrupt, the application will decline. Natwest have not adopted the insolvency part of the treasury agreement.

This point is something I am making complaint to Andrea Leadsom MP, and Natwest Bank.

The agreement article published here:

https://www.gov.uk/government/news/new-basic-fee-free-bank-accounts-to-help-millions-manage-their-money

States: Not all banks will apply these criteria in full – some may choose not to set any eligibility requirements and offer customers a choice from their full range of personal current accounts.


This may seem clear cut on the face of it, however, the actual terms of the agreement that Natwest, HSBC and some others have agreed to does not contain this language and is in fact excluding certain financially suffering customers (the whole point of the agreement).

The actual agreement:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/386953/141211_basic_accounts_agreement_text.pdf

Quite clearly stated here under the heading Account Opening:

• Upon revision of the Insolvency Act (1986) to align with Scottish insolvency law, the
Bank will open a basic bank account for undischarged bankrupts.


I'll update the thread with further info and I'll make a new or offer updated information for the existing thread regarding bank accounts for bankrupts, if that's of interest to anyone?

tigerfeet2006

Thanks for taking the time to research this Alltaken it is all very useful and we are very grateful.

Cobalt77

I see that the Nationwide Flexbasic account is only available if you don't have a UK bank account elsewhere (or are prepared to close it and transfer to them). This is a bit of a pain as I already have a Natwest basic!

I seem to recall that banks etc only do a "proof of identity" type check when opening Basic accounts for us degenerates, rather than the usual full "Credit Check" one.

Does anyone know whether these "proof of identity" type checks are noted on Experian / Equifax etc?

i.e. Does Nationwide actually have any way of knowing you have a Basic account elsewhere, or will they be relying on people being honest? (which is a strange concept in itself to many bankers, lol)

alltaken

Cobalt77 wrote: »

I see that the Nationwide Flexbasic account is only available if you don't have a UK bank account elsewhere (or are prepared to close it and transfer to them). This is a bit of a pain as I already have a Natwest basic!

I seem to recall that banks etc only do a "proof of identity" type check when opening Basic accounts for us degenerates, rather than the usual full "Credit Check" one.

Does anyone know whether these "proof of identity" type checks are noted on Experian / Equifax etc?

i.e. Does Nationwide actually have any way of knowing you have a Basic account elsewhere, or will they be relying on people being honest? (which is a strange concept in itself to many bankers, lol)

By definition your current bank imposes restrictions on you that could be deemed as financial hardship. Also, Natwest have a 'blanket' policy on closing accounts. Yours is open, but for how long? Nationwide would agree with your view that you need a reliable bank account and you could be unsure of your account with Natwest....

The checks for basic accounts have involved credit checking dependent on bank, the identity check I believe will go by electoral roll data, if they can't get the data electronically it then triggers the request to bring in documents to branch/post.

Natwest do a full credit check for a basic account as an example, they say it's to prove you are not better suited to a different account. They don't get their fees from the basic account vs standard account.