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PRESS RELEASE
Embargoed until 00.01 17 November 2005

BASIC BANK ACCOUNTS – SUBSTANTIAL PROGRESS BUT ROOM FOR IMPROVEMENT REMAINS

The Banking Code Standards Board today publishes a report into the provision of Basic Bank Accounts.

Basic Bank Accounts are current accounts, designed for people who want to ensure that they cannot overdraw their account or who might not meet the banks' criteria for opening a standard current account. They are particularly suitable for meeting the needs of people receiving state benefits following the withdrawal of payment of benefits in cash through Post Offices. Banks have been strong supporters of ‘financial inclusion’ and latest data released by the British Bankers’ Association indicates that there are now nearly 6 million accounts open that are Basic Bank Accounts or that have similar characteristics: of these 1.38m are Post Office accessible accounts opened since benefits changes in April 2003.

The BCSB has commissioned four annual rounds of mystery shopping to check how easy it is to open a Basic Bank Account. Following the report in 2004, the Banking Code was strengthened to require participating banks to offer this type of account if it is suitable for a customer’s needs or if an applicant specifically requests one.

A total of 434 mystery shops were completed based upon scenarios of individuals either on benefit or low income and wishing to open an account or enquiring for information about one.

This latest report acknowledges that there have been real improvements since the 2004 review and records increasingly positive reaction from consumers. 67% of people would be prepared to recommend the bank that they opened an account with (up from 41% in 2003 and 57% in 2004).

However there are still areas where we believe that improvement is needed:

1.Whilst it is not a Code requirement to do so, in every survey that we have done to date we have recommended that Banks and Building Societies make sure that

0.their Basic Bank Account literature is readily available in branches. There has been some improvement, but we found that about 30% of our assessors had difficulty in getting literature and in some cases it was not available at all.

2.In about 20% of mystery shops, attempts were made by Bank and Building Society staff to sell a more complex product than the Basic Bank Account. Senior management must ensure that if a basic account is what a customer needs, this is what they will be offered.

3.Speed of being able to open an account is crucial where the payment of benefits is concerned. Unnecessary delays (in one case up to 7 weeks) are unacceptable and providers must do more to help applicants, many of whom are not financially literate or who may not have English as a first language.

4.‘Anti-Money Laundering’ checks still create difficulties. Many benefit recipients do not have documents such as driving licences or passports. Some bank staff need to be more aware of alternative forms of identification: greater flexibility is needed at branch level.

5. Although we are pleased to report a generally improved picture, our report also makes it clear that there is not an even picture across the industry. Some Banks and Building Societies are meeting their commitments under the Code well but others need to focus on ensuring that their staff are aware of the product, that it is readily available and that applicants requiring extra help to complete the process receive it.

Seymour Fortescue, Chief Executive of the Banking Code Standards Board, said: “There has been an improvement across the industry, compared to the results of our previous surveys. However some institutions must do better and where shortcomings have been seen, we will follow up to ensure that consistently good standards are achieved. This remains a key area of focus for us in providing protection to some of the most vulnerable consumers.

Anti-money laundering rules have remained a bar to many applicants getting accounts and we continue to hope that the JMLSG’s current review will make the rules less onerous without increasing the risks to society”.

Media contact and broadcast interviews:

Seymour Fortescue - 020 7397 8252 - 07785 992 453
seymourfortescue@bcsb.org.uk

Website:
www.bankingcode.org.uk (for full text of The Banking Code and the report on Basic Bank Accounts)

Notes to Editors
The report, together with those from previous years, can be found on the BCSB’s website: www.bankingcode.org.uk.

Section 3.1 of the Banking Code states:

Before you become a customer we will
assess whether your needs are suited to a basic bank account (if we offer one) and if they are, we will offer you this product.
offer you a basic bank account if you specifically ask and meet the qualifying conditions for one.

The Banking Code is a voluntary Code followed by banks and building societies in their relations with personal customers in the UK. It sets standards of good banking practice and aims to allow competition and market forces to operate and encourage higher standards of banking practice for the benefit of customers. Copies are freely available from all branches of subscribing institutions, as well as being on the BCSB website, which lists the names of all subscribers, as well as other institutions that the BCSB believes should adhere to the Code but currently do not.

The Banking Code, together with the Business Banking Code, which came into effect on 31 March 2002, has been subject to an independent review by Professor Elaine Kempson, of Bristol University’s Personal Finance Research Centre. Revised editions of both Codes, reflecting Elaine Kempson’s recommendations, became effective on 1 March 2005.

The Banking Code Standards Board (BCSB) was established in October 1999 and is responsible for monitoring and enforcing compliance with the Banking Code. It also offers advice on interpretation of the Code. The independent non-executive Directors of the BCSB are:

Gerard Lemos, CMG, (Chairman): an Audit Commissioner and a Civil Service Commissioner, and Deputy Chairman of the British Council;

Jenny Watson (Deputy Chairman): a director of Global Partners and Associates. Currently the Acting Chair of the Equal Opportunities Commission, and a member of the Advertising Standards Authority's Advertising Advisory Committee. She sits on the Council of the Women's Library at London Metropolitan University, and is a former Chair of Fawcett, a not-for-profit organisation campaigning for equality between women and men.

Sally Hawkins: Equalities consultant and non executive director of University Hospital Lewisham NHS Trust.  Formerly a Member of the Police Complaints Authority and Internal Ombudsman for Cambridge City Council; 

Claire Ighodaro has spent most of her career with BT. The positions she held there included, Programme Director of a major joint venture in Germany; Head of Group Quality; and Finance Director, broadband. She was worldwide President of the Chartered Institute of Management Accountants and she is the co-author "Ethical, Social and Environmental Accountability".

Amanda Jordan, OBE: Chairman of the SMART Company, a consultancy that specialises in corporate social responsibility, Chair of One London (the London Enterprise Agency), a trustee of the Money Advice Trust, and formerly an adviser to the Social Exclusion Unit in the Cabinet Office and Head of Public Affairs at NatWest;

Alan Whiting was Director of Financial Regulation, covering banks, building societies and friendly societies, at HM Treasury. More recently, he was Executive Director, Regulation & Compliance at the London Metal Exchange. Mr Whiting provides valuable links with Whitehall together with practical high level experience of regulatory issues in the private and public sectors.

The British Bankers’ Association (BBA), the Building Societies Association (BSA) and the Association for Payment Clearing Services (APACS) are the three industry sponsors of the Banking Code.

The Banking Code is a voluntary code which sets the standards of good banking practice for banks, building societies and credit card companies to follow when they are dealing with personal customers in the United Kingdom. As a voluntary code, it allows competition and market forces to work to encourage higher standards for the benefit of customers. The first Banking Code was introduced in December 1991 and the latest Code, the seventh, took effect from 1 March 2005. The Banking Code is sponsored by the British Bankers’ Association, the Building Societies Association and APACS.