Banks and building societies to launch new fee-free 'no frills' accounts
Major banks and building societies have agreed to offer new fee-free "no frills" bank accounts from January 1 as part of a drive to increase people's access to basic banking facilities.
Barclays, Santander, NatWest, RBS, HSBC, Lloyds Banking Group, TSB, the Co-operative Bank and Nationwide Building Society are among those that will offer deals under the agreement, the Treasury said.
Basic bank accounts, which are already offered by some banks, are a way for people who have a poor credit history to get access to basic banking facilities so that they can receive money and pay bills. These types of account tend not to come with an arranged overdraft.
The new accounts will enable people to manage their day-to-day finances without having to worry that they could be pushed into an unarranged overdraft by fees and charges imposed on their account, the Treasury said.
Last Christmas, the Government and the banking industry agreed to establish new basic bank accounts that would end bank charges if a direct debit or a standing order failed.
In some cases, charges had been as high as £35 per failed item, and these charges could accumulate over time to add up to hundreds of pounds-worth of debt.
It has been agreed that the basic bank accounts will have standard features such as access to the ATM network, the ability to create direct debits and standing orders and the ability to make card payments, including online.
Providers will not charge people for using the new standard basic bank account services, although fees may still be charged for some other services.
Basic bank account customers will also be offered services on the same terms as other personal current accounts that the banks provide, including access to all the standard over-the-counter services at bank branches and at the Post Office.
The Treasury said there were an estimated nine million basic bank accounts across the UK, and existing basic bank account customers should ask their bank whether they could still be charged if a direct debit or standing order failed, and whether they were eligible for a new basic bank account.
Economic Secretary Harriett Baldwin said: " I'm delighted that for the first time, truly fee-free basic bank accounts will be available to anyone who doesn't already have an account, or isn't able to use their existing account due to financial difficulty.
"This is a key step forward in ensuring that our banking industry works for everyone."
Sian Williams, head of the Financial Health Exchange at Toynbee Hall, said: "We know from our work with the financially excluded that a transactional bank account is essential for getting and sustaining a job and a home, as well as for accessing opportunities to study and take part in wider society.
"We therefore fully support the new basic bank account initiative to ensure everyone has access to a bank account."
The banks and building societies that have signed up to offer a basic bank account from January 1 2016 and their corresponding bank account product are:
:: Barclays - Barclays Basic Current Account
:: Santander - Basic Current Account
:: NatWest - Foundation Account
:: Ulster Bank (Northern Ireland) - Foundation Account
:: The Royal Bank of Scotland (Scotland) - Foundation Account
:: RBS (England and Wales) - Basic Account
:: HSBC - Basic Bank Account
:: Nationwide - FlexBasic
:: Co-operative Bank - Cashminder
:: Lloyds Banking Group (including Halifax and Bank of Scotland brands) - Basic Account
:: TSB - Cash Account
:: National Australia Bank Group (including Yorkshire Bank and Clydesdale brands) - Readycash Account