CSFI

CSFI
The financial inclusion element of basic bank accounts is clear from the eligibility
criteria. These accounts must be provided to those ineligible for a full bank account,
regardless of whether they were previously unbanked. A bank can refuse to open an
account for an eligible customer – but only if it is concerned that he or she will use it
unlawfully or abuse staff, or if reasonable requirements for opening a bank account
(including identification and consent to a credit search) are not met.
All UK banks must now offer these accounts by law, and an industry agreement with
the largest providers aims to ensure that they really are fee-free. This certainly tends
to be the case as long as the account is in credit, and banks can stop payments if
funds are insufficient. Fees have, however, been charged for failed payments or for
an inadvertent dip into the red. Under an agreement between the Treasury and nine
banks and building societies, some of these penalties were scrapped in 2015.
It is not surprising that it has been political pressure, rather than market forces, that
has driven the roll-out of basic bank accounts, since they are typically loss-making.
Administration costs almost always outweigh income available from providing
other services, such as overdrafts, that charge interest or incur fees. According to the
Treasury in 2014, it was costing the industry approximately £300 million a year to
provide basic bank accounts.
An obvious question is: What more can be done?
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