'Bankrupts not being allowed to open accounts'
July 28, 2010 at 12:37 pm
Citizens Advice has revealed that people who are in the process of going through bankruptcy are being denied the right to open a basic bank account.
The organisation looked at 17 banks in total, and discovered that only two out of the lot provided bankrupts with basic accounts. A basic account does not provide the user with access to credit or a cheque book, but allows funds to be paid into the account by direct debit, such as income and benefits.
This can have serious consequences because if people cannot get access to an account then they are more likely to carry cash with them, they are unable to take advantage of direct debit discounts and some people may even end up losing their jobs because they have nowhere to receive their wages.
Citizens Advice said that there is no legal reason why people should be denied a basic bank account because they have been declared bankrupt.
Gillian Guy, the chief executive of Citizens Advice, said that “great progress has been made in improving access to bank accounts for many groups who were previously financially excluded”, but lamented the fact that there are still groups who are unable to open accounts.
The only two banks to offer basic bank accounts were Barclays and the Co-operative. Other banks including HSBC, Santander, Nationwide and RBS do not provide the service.
Banks claim that their decision not to allow bankrupts to open a basic account is mainly due to risk issues involved. The BBC quoted a spokesman for the BBA (British Bankers’ Association) explaining that it is a commercial decision by each bank as to what they decide to do.
