New research published today suggests that the banking system is failing to address the needs of low income consumers. The Financial Services Consumer Panel has today written to the British Bankers Association, HM Treasury and the Department for Work and Pensions, expressing concern at the lack of access to the recently launched basic bank accounts, uncovered in research commissioned by the Panel.

The Government has pressed for bank accounts to be made more open to low income consumers – Economic Secretary Ruth Kelly MP said last year "Basic bank accounts are one of the key foundations of extending access to financial services, we need to ensure all the potential barriers to opening them are minimised."

And yet, "mystery shopper" research carried out for the Financial Services Consumer Panel has highlighted that:

• None of the potential customers trying to open accounts at banks/building societies – the majority with household incomes of less than £10,000 a year – were offered a basic bank account;
• Only one of the potential customers asking for information at branches and talking about worries about debt, was specifically referred to information about basic bank accounts;
• Of the shoppers that were able to open a current account, there were some who were surprised by the amount of immediate credit they were offered, with 3 out of 16 being offered credit card applications – one being given an immediate £500 limit;
• At the other end of the scale, three out of 16 applicants were turned down because of unnecessarily strict criteria on identification, and one because of a history of County Court Judgements.

The results point to the conclusion that banks are not marketing the new basic bank accounts in a user-friendly and accessible way, and they are not recommending these accounts when they may be the most suitable option for people.

Colin Brown, Chairman of the Panel said,
"Basic Bank accounts are a crucial first step on the ladder out of financial exclusion. If the Government is serious about tackling this, then much more must be done to promote access to basic accounts.

"Banks must ensure all front line staff are fully aware of these products, and are trained to identify when a basic bank account is needed.

"The Treasury and Department for Work and Pensions, should also look to support this policy by ensuring that consumers are able to access the most appropriate financial products for their needs.

"This is urgent. The Government will start paying state benefits through the banking system in a year's time. We are asking the Government and the BBA to take steps to ensure greater promotion of access to the banking system for the low income consumer during this crucial year leading up to the benefit system changes beginning in April 2003."

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Notes to editors