Banking

Supporting residents to access appropriate financial products

Banking - supporting people to choose and use the right account

A fully transactional bank account is the minimum needed for a person to be financially included.

"Fully transactional" is understood to mean that the account a) provides a debit card to enable residents to pay by phone and on-line b) a direct debit facility to enable utility and other bills to be paid at a discount.

Where residents have a poor credit history or have little experience of operating a bank account, a Basic Bank Account (BBA) or Credit Union Current Account (CUCA) may be best.

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Basic Bank Accounts

All banks and building societies have committed to offering customers a "Basic Bank Account"  which is fully transactional, with no bank charges applied while the account is in credit.

Visit www.moneyadviceservice.org.uk for a copy of their Guide to Basic Bank Accounts.

Credit Union Current Accounts

Some London Credit Unions offer a Credit Union Current Account (CUCA) which is fully transactional, does not require a credit history or include any credit facility.

Unlike a Basic Bank Account, a CUCA will normally make a monthly charge for running costs, typically £3 to £6 per month.

Nevertheless a Credit Union Current Account may be the best choice for some people returning to banking or getting "banked" for the first time.

For example:

• when a customer cannot establish their identity to the satisfaction of a commercial bank
• when a customer needs more intensive support in managing the account than a commercial bank can provide

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 What happens when Local Authorities support residents into banking:

Increasing local prosperity: supporting people to become "banked" with a fully transactional account means that they can:

• pay bills by direct debit - usually at a significant discount
• have the choice and convenience of purchasing by phone or on-line
• avoid the extra costs of having benefit and other cheques "cashed"
• have the option to borrow money from mainstream lenders, rather than  being restricted to highcost doorstep lenders
• have the option of buying goods on credit from a wide range of retailers rather than those that specialise in cash-only customers

Reducing borough costs: increasing the number of Housing Benefit Payments made by BACS rather than cheques saves money for Local Authorities.

See on-line two examples of boroughs promoting Banking to their Housing Benefit customers: 

http://www.hackney.gov.uk/benefits-banking-information-pack.htm.

http://www.merton.gov.uk/living/benefits/hb-ctb/basicbankaccountshbctb.htm

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How to target neighbourhood banking campaigns 

Neighbourhood campaigns to support people into banking need to be focussed on areas of greatest need.

The Experian Basic Bank Account statistics 2010 show which Lower Super Output Areas in each ward are likely to have people on low income without a transactional bank account.

Collated by the Treasury for the DWP Financial Inclusion Champions initiative, the data was provided to all Boroughs 2010 - 2011.

The information is not in the public domain but is stored a K:CommunityServices/DWPFinancialIncluisonProgramme/BasicBankingStatistics2010 at London Councils.

Boroughs requiring access to the information for their own use or the use of their strategic partners should contact Head of Community Services Mark Brangwyn Opens in a new window

This item is toolkit number 7