The biggest banks in the U.K. are legally required to provide basic accounts to customers facing financial hardship, but a covert shopping exercise by the Financial Conduct Authority (FCA) found they’re doing a poor job of it.
In a review of the banks that are obliged to provide basic accounts, the regulator carried out a “mystery shop” — posing as customers that should be entitled to basic accounts, based on their financial circumstances — finding that only 28% of their interactions with the banks were considered “good or very good,” while 34% were rated as “poor or very poor.”
Among other things, the exercise found that the FCA’s secret shoppers often weren’t offered basic accounts and were pushed into other unsuitable options.
“The firms often failed to mention basic bank accounts at all and pushed customers in vulnerable circumstances towards online applications unsuitable for their needs,” the FCA found.
“[A]ll too often banking firms’ engagement with customers still needs improvement,” said Emad Aladhal, director of retail banking at the FCA, in a release. “Bank accounts are important for financial inclusion, and this is about making sure the very people who could benefit from basic bank accounts are not missing out.”
To address the review’s findings, the FCA said the various banks and lenders have agreed to institution-specific improvements, and they collectively agreed to make it easier for vulnerable clients to get access to basic accounts.
The FCA’s Aladhal said the regulator will be holding the banks that have made these commitments to account “to make sure change happens.”
“A basic bank account can be an important first step towards financial independence, and while most customers who hold one have positive experiences, we recognize that more can be done to ensure consistently good outcomes for everyone,” said Peter Tyler, director of personal banking at banking industry trade group, UK Finance, in a release.