Access to banking services could become significantly simpler for millions of individuals after several of Britain’s largest financial institutions pledged to modify their customer service approaches.

The commitment comes in response to a review conducted by the Financial Conduct Authority, which discovered that numerous eligible customers were either being rejected, funnelled towards inappropriate digital application processes, or simply not informed about basic account options.

These accounts cater specifically to individuals who do not meet the criteria for regular current accounts, including those with adverse credit records, debt challenges, or lacking a permanent place of residence.

The FCA emphasised that such accounts serve essential functions for receiving income, welfare payments and managing household expenses, yet the review identified significant issues throughout the sector.

One in three banking interactions deemed unsatisfactory

Regulators conducted 298 covert assessments across branches and via telephone.

Results showed:

A fifth of interactions were classified as poor

Fourteen percent fell into the very poor category

Slightly more than a quarter were considered good or very good

Just over a third were rated as fair

Reviewers observed that employees frequently delayed mentioning basic account options, failed to recognise signs that customers might need additional support and regularly steered individuals toward online processes unsuitable for their specific situations.

Those lacking conventional identity documents or stable accommodation experienced particular difficulties.

Currently, approximately 4.3 million adults in the UK hold basic bank accounts, though official estimates suggest roughly 900,000 individuals remain entirely without access to banking facilities.

Participating institutions

Following the FCA report, Britain’s major banks and building societies have pledged to enhance their delivery of basic account services.

The participating organisations are:

Barclays

The Co-operative Bank

HSBC

Lloyds Bank

Halifax

Bank of Scotland

Nationwide Building Society

NatWest

Royal Bank of Scotland

Ulster Bank

Santander

TSB

Virgin Money

These companies have undertaken to:

Ensure customers receive the appropriate account from the outset

Simplify the account opening procedure for those without conventional identification or permanent residence

Improve detection of customers requiring additional assistance

Offer alternative solutions for individuals unable to use digital application systems

FCA warns major lenders

Emad Aladhal, the FCA’s retail banking director, indicated that while progress has been achieved with over 97 percent of UK adults now holding current accounts, the regulator’s recent work demonstrates that financial institutions still need substantial improvement in their customer interactions.

He noted that bank accounts play a crucial role in ensuring financial participation, and the priority is guaranteeing that those who could benefit from basic accounts are not being excluded.

He added that the largest banks have now committed to enhancing how these accounts are presented, and the FCA would be monitoring their progress to ensure tangible improvements occur.

Peter Tyler, UK Finance’s personal banking director, observed that a basic bank account can represent an important initial step toward financial autonomy, and while the majority of existing holders report positive experiences, the industry acknowledges that more work is required to guarantee consistently positive outcomes for all customers.

He explained that UK Finance and its member organisations are dedicated to elevating industry standards and broadening accessibility.

The recently expanded breaking the cycle programme forms a central component of this effort, delivering practical assistance to those encountering obstacles to essential banking services, such as individuals lacking stable accommodation.

Eligibility for basic bank accounts

These accounts are designed for individuals who:

Have been declined for a standard current account

Possess an unfavourable credit record

Have been declared insolvent

Do not have a permanent address

Lack conventional identity documentation

Require an account for receiving wages or benefits and paying regular bills

Unlike standard current accounts, basic versions do not provide overdraft facilities, enabling customers to manage without borrowing while still accessing everyday banking services.