Charge-free basic accounts unveiled
A basic bank account with no fees for failed payments has been unveiled following an agreement between Britain's major lenders and the Government.
The charge-free accounts are expected to be launched by the end of next year and will help those people who have been shut out of normal banking because of previous money problems.
Banks have been charging between £6 and £35 for a failed payment, capped at £30 a day or £150 per quarter in some cases. Other banks allow accounts to accrue uncapped charges, pushing holders into unauthorised overdrafts.
Some customers find it difficult to get a debit card and banks have also previously sought to limit access to the ATM network.
Basic bank account customers will now be offered services on the same terms as other personal current accounts, including access to standard over-the-counter services at bank branches and at the Post Office, as well as access to the entire ATM network. The accounts will not come with overdraft facilities or have interest added when in credit.
The nine banks who have agreed to offer basic bank accounts are Barclays, the Co-operative Bank, HSBC, Lloyds Banking Group (including Halifax and Bank of Scotland), National Australia Group (Clydesdale and Yorkshire), Nationwide, RBS Group (NatWest and Ulster Bank), Santander and TSB.
Each bank has committed to offer the improved accounts by the end of 2015.
The move comes ahead of the EU Payment Accounts Directive, which requires member states to provide access to a basic payment account from 2016.
The accounts will allow customers to:
:: Have wages, benefits, State pension or tax credits paid directly into their account.
:: Pay in cheques for free.
:: Take money out at cash machines with a cash card.
:: Withdraw money at a Post Office branch or relevant retail bank.
:: Pay bills by direct debit and make card payments, including online.
Treasury economic secretary Andrea Leadsom said the agreement meant people without an account, or who would struggle to get a standard account due to money problems, will be able to manage their money with "certainty and clarity".
She added: "It will end people being effectively locked out of their basic bank accounts due to high fees and charges when their payments failed.
"Ending this unfair situation is a real step forward for the banking industry's most vulnerable customers and improving access to banking is a key part of our long-term economic plan."
It currently costs the banking industry about £300 million to provide basic bank accounts to an estimated nine million people.
Anthony Browne, chief executive of the BBA trade body, said the proportion of the population with no account at all is less than a third of that in the United States and Europe.
He added: "Now we will be helping even more people access banking services than ever before, and these basic accounts will make it easier for more people to manage their money."
The launch comes amid a crackdown on the payday lending industry, which has picked up business in recent years as more people struggle to maintain access to a basic bank account.