Banks urged to promote no frills accounts for the unbanked

The Financial Conduct Authority (FCA) is urging banks and account providers to enhance awareness of basic bank accounts, which allow users to make and receive payments without overdraft facilities. As of June 30, 2023, there were over 7.3 million basic bank accounts in the UK, yet approximately 1.1 million adults remained unbanked as of spring 2022. The FCA emphasizes the need for account providers to support vulnerable consumers, including those with learning disabilities and individuals in the adult entertainment sector, who often face challenges in accessing banking services. The FCA has called for a review of account denial and closure practices to ensure that vulnerable individuals are not unfairly affected. It highlights the importance of accepting alternative forms of identification for those unable to provide standard ID, such as utility bills. Consumer groups have reported that some individuals have been denied accounts due to misconceptions about their capabilities or lack of conventional identification. Sheldon Mills, the FCA's executive director, stated the goal is to achieve consistent outcomes for consumers, ensuring they are informed about suitable account options and receive adequate support. The regulator has also reminded providers to communicate clearly with customers regarding account closures and denials, adhering to their consumer duty obligations. In 2023, the FCA found no evidence of accounts being closed due to political opinions, reinforcing the need for accountability among financial institutions. Senior leaders in these firms are now required to take personal responsibility for compliance with regulations, aiming to foster a more inclusive banking environment for all individuals.