The FCA is urging banks, building societies, and payment firms to enhance their efforts in making basic bank accounts more accessible.
This initiative is part of a broader push to support individuals who currently lack bank accounts, particularly focusing on vulnerable demographics.
The FCA has commended certain best practices already in place, such as collaborations with homeless charities, which tailor banking support to the needs of these groups. Nevertheless, the report points out that more could be done to raise awareness about the availability of basic bank accounts, which offer essential payment services without the option of an overdraft.
In an effort to streamline access, the FCA is calling on account providers to simplify application processes and to review their procedures for account denials and closures. Special emphasis is placed on ensuring that vulnerable customers do not suffer disproportionately from these practices. Moreover, the report stresses the importance of accommodating alternative forms of identification for account creation, which would help those unable to provide standard IDs.
Sheldon Mills, Executive Director of Consumers and Competition at the FCA, highlighted the dual nature of the current landscape: “We’ve seen examples of really good practice – with account providers helping people access a product vital for financial inclusion – but also areas where there is room for improvement. By sharing both, we want to achieve more consistent outcomes, with people being aware of what accounts there are that might be right for them, more support for the vulnerable and people not being denied access without good reason.”
The report also sheds light on the challenges faced by organisations such as pawnbrokers, charities, and those in the adult entertainment industry in accessing banking services. It calls for a clearer definition of reputational risk by firms, though the FCA acknowledges its limited authority over business and charity customer accounts.
The FCA’s commitment to financial inclusion is further underscored by its ongoing independent research, which explores the experiences of financially excluded consumers with financial products and services. This research aims to inform industry and consumer groups on how to better support these consumers.
As we move forward, the FCA has not found any new evidence of accounts being closed due to lawfully expressed political opinions, but continues to urge senior leaders within financial firms to take personal responsibility for ensuring compliance with regulatory requirements.
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