In a recent report, the Financial Conduct Authority (FCA) is encouraging banks and payment providers to take stronger action in supporting individuals who want to open a bank account but face barriers. While the FCA acknowledges that many financial institutions are already making efforts to help customers, particularly those in vulnerable situations, it believes there is more work to be done to build on these practices.
One key area of focus is raising awareness about basic bank accounts, which enable individuals to perform essential transactions without access to overdraft facilities. The FCA found that many providers could simplify the application process for these accounts, making them more accessible to people who need them most.
The FCA has also urged banks and account providers to reassess their policies on account denials and closures. Vulnerable consumers, in particular, should not be denied access to essential financial services because they lack standard forms of identification. Providers are encouraged to make it clear which alternative forms of ID are accepted, ensuring broader inclusivity.
In cases where accounts are closed or denied, the FCA reminds providers of their obligations under the Consumer Duty to communicate decisions in a transparent and supportive manner. This aligns with the FCA’s broader goal of ensuring fair outcomes for all consumers, particularly the financially excluded.
The FCA’s report includes qualitative research on the challenges faced by those who are often excluded from financial services. This research aims to help both industry and consumer advocacy groups better understand the needs of these consumers and how targeted support can make a difference.
Sheldon Mills, Executive Director of Consumers and Competition at the FCA, highlighted the importance of consistency across the industry, saying: “We’ve seen examples of really good practice… but also areas where there is room for improvement. By sharing both, we want to achieve more consistent outcomes.”
The report also addresses challenges faced by certain businesses and charities in accessing accounts, emphasising the need for clearer definitions of reputational risk.
By focusing on these issues, the FCA hopes to ensure that financial services remain accessible and inclusive, helping to prevent unfair exclusions. For more information, read the FCA report here.
