FCA Orders Nine Major Banks to Improve Access to Fee-Free Basic Bank Accounts

The Financial Conduct Authority has told the UK’s biggest banks and building societies to fix poor practice around basic bank accounts — no-fee, no-overdraft accounts that millions of people are legally entitled to open.

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What the FCA Has Found

Picture this: you walk into your bank, explain you can’t get a standard current account, and the person behind the counter doesn’t mention that you’re legally entitled to a free, no-frills alternative. According to the Financial Conduct Authority, that scenario has been playing out at some of the biggest banks in the country — and the regulator has had enough.

The FCA has reviewed how retail banks handle basic bank accounts and found widespread poor practice. Frontline staff aren’t consistently telling eligible customers these accounts exist. Application processes are unnecessarily complicated. And some banks aren’t meeting their legal duties under the Payment Account Regulations 2015.

Nine institutions are legally required to offer basic bank accounts under those regulations, as designated by HM Treasury. They are Barclays, Santander, Royal Bank of Scotland (including NatWest), HSBC, Nationwide Building Society, The Co-operative Bank, Lloyds Bank (including Halifax and Bank of Scotland), TSB, and Virgin Money (including Clydesdale and Yorkshire Bank).

What a Basic Bank Account Actually Is

Basic bank accounts are straightforward by design. They’re fee-free for standard operations in sterling, carry no overdraft facility, and allow customers to receive wages and benefits, pay bills by direct debit, withdraw cash, and use a debit card. No credit check is required to apply — though banks still have to follow fraud and anti-money laundering rules when opening them.

As of 30 June 2023, there were 7,363,018 basic bank accounts open across the nine designated institutions, according to HM Treasury’s Basic Bank Account Report. That’s a sizeable number — but consumer advocates say many more people who qualify simply don’t know these accounts are available.

The accounts are aimed at people who are legally resident in the UK, don’t currently hold a bank account, or aren’t eligible for a standard current account. That might mean someone with a poor credit history, someone who’s been through debt problems, or someone who’s never had a UK bank account at all.

Where the System Is Falling Short

The FCA’s review identified a pattern of inconsistent information, weak promotion, and gaps in staff training. Banks have been told to review their policies, procedures and training to make sure eligible customers are offered a basic account at the first point of contact — not turned away without explanation.

On top of that, the regulator has also reminded banks of their Consumer Duty obligations, which require clear communication and fair treatment, chiefly for customers in vulnerable circumstances. Banks must open or refuse a basic bank account application within 10 business days of receiving a completed application, without undue delay.

But the FCA’s findings suggest that in practice, some banks have been falling short of even those basic requirements.

What Consumer Groups Are Saying

Organisations including Citizens Advice and National Debtline have long argued that basic bank accounts are under-promoted. The FCA Consumer Panel has urged the regulator to push banks to improve visibility and make these accounts available through a wider range of communication channels — not just in-branch visits.

Consumer advocates have also raised concerns about excessive identification demands. Some people applying for basic bank accounts — above all those who are homeless or without formal documentation — have found the process harder than it should be. The FCA has specifically encouraged banks to work more effectively with homeless charities and organisations supporting vulnerable people.

The government has also indicated it intends to update secondary legislation to ensure basic bank account users benefit from equivalent protections when wider payment account reforms come into effect.

What Happens Next

The FCA’s direction is clear: the nine designated banks must improve awareness, simplify applications, and ensure staff are properly trained to offer basic accounts where customers are eligible. The regulator will expect banks to demonstrate good customer outcomes and proper governance over how accounts are opened, denied, and closed.

Legislative changes are also planned to bring basic bank account users in line with protections available under broader payment account reforms — though exact timelines for those changes haven’t been confirmed.

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Key Takeaways

• The FCA has found widespread poor practice in how major banks inform and support customers eligible for basic bank accounts, and has told all nine designated providers to improve.
• Basic bank accounts are fee-free for standard sterling operations, carry no overdraft, require no credit check, and must be opened or refused within 10 business days of a completed application.
• As of 30 June 2023, there were 7,363,018 basic bank accounts open at the nine designated institutions, but consumer groups say many eligible people still don’t know these accounts exist.

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What This Means for Kent Residents

If you live in Kent and you’ve been refused a standard current account — or you’re struggling with debt, have a poor credit history, or have simply never held a UK bank account — you have a legal right to apply for a basic bank account at any of the nine designated providers. These accounts let you receive wages and benefits, pay bills by direct debit, and use a debit card, all without paying account fees or risking overdraft charges. Local services including Citizens Advice in Kent can help you understand your options and support you through the application process — and if you’re being turned away without a clear explanation, the FCA’s strengthened Consumer Duty rules mean banks are now under greater pressure to treat you fairly and explain their decisions properly. You can find your nearest Citizens Advice branch through their national website, or contact National Debtline on 0808 808 4000 for free, confidential debt and banking advice.