Nearly one million of the poorest people in the UK could be lifted out of financial exclusion if a new, simple-to-use bank account is launched by the trusted Post Office network, according to new Consumer Focus research¹. The consumer champion is calling on the Government to introduce a tailored bank account product as part of their plans to introduce banking services through the Post Office².
Seven out of ten (71%) of the financially excluded – those with no bank account or just a Post Office Card Account (POCA) – said that a new, easy to use, convenient to access bank account³ would suit them better than their current arrangements.
Slightly more (72%) said they would consider opening such an account if it was available at any of the Post Office’s 11,500 branches. Nearly half (48%) distrusted the high street banks to look after their money, with many reporting problems meeting banks’ identification rules when trying to open an account.
If all the financially excluded who expressed a preference for a new Post Office bank actually opened one, almost half of the 1.2 million people with a POCA and 360,000 of the 900,000 consumers with no account at all would be lifted out of financial exclusion.
Financially excluded people often struggle to access mainstream financial products such as bank accounts and low cost loans. The exclusion imposes real costs on individuals and their families as they are, for example, more likely to use sub-prime credit and pay interest many times that of a standard personal loan. These costs often contribute to spiralling debt.
Andy Burrows, postal expert, Consumer Focus, said: ‘Millions of consumers miss out on even the most basic banking services and face daily hardship as a result. Many on low incomes feel poorly served by the banks, but trust the Post Office.
‘This is a golden opportunity for the Government to lift thousands out of financial exclusion. The Post Office network is well placed to offer, not just this targeted account, but a range of neighbourhood banking products with wider appeal.’
Consumer Focus is calling for the Post Office to introduce a similar product to the blueprint banking product designed in the consumer champion’s research³. The product should have functions not offered by the POCA, such as the ability to receive payments such as wages, universal ATM access and debit card capabilities.
To see the full summary of the research please click here
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Fact file
There are almost the same number of Post Office branches (11,956) as bank and building society branches combined (12,270) – Source: British Bankers’ Association.
Notes to editor
¹ The research was conducted by ICM and involved 1142 face to face interviews with low income consumers in 13 locations across the UK during July 2009. These included consumers with bank accounts (both receiving benefits and not receiving benefits), POCA holders with a high street bank account, POCA holders with no other type of bank account and consumers with no bank account at all.
The research was designed to give a better understanding of the personal finance needs of low-income consumers and to find out if the Post Office could meet their particular needs. It will form part of Consumer Focus’ response to the Government’s consultation on developing banking and financial services, which is due to close on 24 February 2010.
² Gordon Brown announced plans to extend the range of banking services offered through the Post Office at the Labour Party Conference on 29 September 2009. The Government’s consultation on this closes on 24 February 2010. This research will form part of Consumer Focus’ response to the consultation.
³ The research included a blue print design for a ‘custom’ bank account based on what low income consumers said they wanted from a banking product. The product incorporated principles considered as essential by the low income consumers surveyed including convenient access, simplicity and control. It was designed to offer a viable alternative to both POCA and mainstream basic bank accounts. The account differs from POCA as it would allow consumers to receive inward payments such as wages, access cash from any ATM and have debit card functions.
