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 research. The consumer champion is calling on the UK Government to introduce a tailored bank account product as part of their plans to introduce banking services through the Post Office.
Across the UK 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 account 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.
Research in Wales has shown that almost 200,000 people do not have bank account, which is around 8 per cent of the population over 16. It is estimated that 10 per cent of households in Wales have a POCA, slightly above the UK average of 7 per cent.
A recent report by Consumer Focus Wales, Cost of Cash, tells us that people have greater trust in Post Offices than they do high street banks. 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.
Lindsey Kearton, senior policy advocate at Consumer Focus Wales, said: ‘Thousands of consumers in Wales 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.’
This type of account should be made more suitable for people who like to be in control of their own cash and can access it easily. 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 see www.consumerfocus.org.uk
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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.
Background notes
- 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.
- 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.
- 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.
- A report by the Welsh Consumer Council in 2008, Access to Cash, showed that 191,000 people in Wales do not have a bank account.
- Department for Work and Pensions Family Resources survey 2008 revealed that 10 per cent of households in Wales used POCA.
- Cost of Cash was research carried out by Consumer Focus Wales which forms part of a wider study into what is often called the ‘poverty premium’ and how it affects families in Wales. The full report can be accessed by clicking here.
- Consumer Focus is the independent champion for consumers, created from the merger of energywatch, Postwatch and the National Consumer Council (including the Scottish and Welsh Consumer Councils). We are the voice of the consumer, and work to secure a fair deal on their behalf.
