Select Committee: Time to act on ‘unacceptable’ level of UK financial exclusion

Chairman of the Committee, Baroness Tyler of Enfield said: “The UK financial services sector is a world leader which makes it doubly unacceptable that it is failing those who need it most. Too many people still have no bank account or cannot get access to basic or fairly priced financial services. The ‘poverty premium’—where the poor pay more for a range of services from heating their home to accessing credit—contributes to a vicious circle driving people ever deeper into debt and distress.

“The Government have said they want the system to ‘work for everyone’. So do we. We hope they share our view that the current level of financial exclusion is unacceptable. The victims are often the most vulnerable in society – the elderly, the poor or those living with physical disabilities or mental health issues. Action must be taken to ensure the financial system in this country works for all.

“The Government and the FCA should introduce a duty of care for bank customers – currently some banks deliver on their social responsibilities, but too many don’t. It is time we required them to do so. Banks should also ensure they are offering, and properly promoting, basic bank accounts to those customers who need them.

“All too often, disabled customers are being failed by banks who are not adjusting their communications and procedures to serve them properly. We have heard of banks contacting deaf people by phone and sending written PIN numbers to blind people instead of using braille.  Banks must review their own practices toward disabled customers to ensure they are making the reasonable adjustments already required of them by law. It is totally unacceptable that this situation persists, over twenty years after the introduction of the Disability Discrimination Act.”

Recommendations included in the report:

• Recommended that the Government should appoint a clearly designated Minister for Financial Inclusion. The Minister should have lead responsibility for promoting financial inclusion and should be supported with appropriate resources to co-ordinate effectively work to address financial exclusion.
• Recommended that regulations to limit and manage the negative impact of unarranged overdraft charges should be introduced. The potential for such regulations should be assessed as part of the ongoing FCA review into highcost credit.
• Recommended that the Government work proactively with the Post Office and banks to fund and launch an extensive public information campaign on the banking services that are available through Post Office branches. The Government—as sole shareholder in Post Office Ltd—should also ensure that the Post Office provides adequate training for staff at branches within retail outlets, so that they can carry out banking services for customers with confidence and competence.
• Recommendedthat the Government abolish the seven-day waiting period at the start of a Universal Credit claim; the waiting period contributes to sometimes lengthy delays in claimants receiving their first payment. These delays put claimants at significant risk of falling into arrears.