Basic bank accounts failing poor

The basic financial needs of the poorest people are still not
being met despite the introduction of ‘no-frills’ bank
accounts five years ago, according to research out today.

The study, produced by the National Consumer Council (NCC), an
organisation representing consumers, and social and economic
research consultancy Polis finds that the poor continue to rely on
high-cost borrowing.

Almost six million basic bank accounts have been opened but
around half of people on low incomes still prefer to manage their
money in cash because the accounts don’t meet their
needs.

The research also finds that people with bank accounts are more
likely to lose control of their finances and to be in arrears with
their household bills than those without them.

The NCC has called for basic bank accounts to be made more
flexible by offering services such as weekly direct debits, to fit
in with low-income budgeting cycles, and a small free
overdraft.

Claire Whyley, the NCC’s deputy head of policy, said.
“There is a mismatch between the needs of the poorest to keep
close track of their income and spending and to avoid debt, and
existing bank account design which doesn’t help them achieve
this.”

Independent and Affordable from: www.ncc.org.uk/moneymatters/affordable