Do you have a right to a bank account?

The Financial Conduct Authority (FCA) will look into why 1.1 million people in the UK do not have a bank account and who falls into this category.

It also intends to probe the “apparent high range of declines” for people looking for basic bank accounts.

– Do I have a right to a bank account?

The law does not include a universal right to a bank account for either people or businesses, according to the FCA.

As long as they comply with the relevant rules and legislation, firms can decide whether to provide a payment account based on commercial and risk factors.

However, the nine largest credit institutions must provide a basic bank account to eligible UK personal customers who would not otherwise be able to get an account.

These “no frills” accounts come without fees, charges or an overdraft. There is no equivalent requirement for businesses, including charities or campaign groups.

– How likely is it that people could be turned down for a current account?

The FCA’s research indicated that, when excluding outliers, firms reported declining between 0.1% and 6.7% of personal current account applications, suspending between 0.1% and 2.3% of accounts and terminating between 0.2% and 3.4% of accounts, in the period from July 2022 to June 2023.

For basic bank accounts, firms declined between 1% and 35.7% of applications, suspended between 0.03% and 1.8% of accounts and terminated between 0.4% and 1.8% of accounts.

By far the most common reasons providers gave for declining, suspending or terminating an account were because it was inactive/dormant or because there were concerns about financial crime, the FCA said.

– What protections are there for account holders?

When providing any service, credit institutions and payments firms are required by equalities legislation not to discriminate on the basis of race, sex, religion and other protected characteristics.

The Payment Accounts Regulations 2015 require credit institutions not to deny a UK consumer access to a personal payment account on the basis of a range of protected characteristics, including lawful political views.

– What if a provider believes a crime has been committed?

Under financial crime requirements, providers will decline or close an account in some circumstances, and under immigration laws they must do so in certain circumstances, according to the FCA.

But it added that, where, for example, a firm has suspicions of financial crime, they should investigate this in a reasonable timeframe and not unnecessarily deny people access to their accounts.

– How does the new consumer duty fit in?

The consumer duty was introduced on July 31. It means that financial services firms must put retail customers’ needs first and deliver good outcomes for them.

– What if I am unhappy with how I have been treated?

Customers can complain to their provider and if they are unhappy with the response, individual consumers, small businesses, and small charities can then refer their complaint to the Financial Ombudsman Service (FOS).

The service has a dedicated team to deal with account closures. It has a range of remedies for those treated unfairly, including requiring providers to keep an account open or reopen it.

– What happens in other countries?

There are different approaches globally on access to banking, with some countries taking steps to mandate or promote access to accounts.

According to a research document released by the FCA, in France, residents have the right to a bank account, whether it is for personal use or to run their own business.

In 2020, the Belgian government legislated that any company established in Belgium and registered with the Crossroads Bank for Enterprises or applying for registration is entitled to a basic banking service, the document said.

It continued: “Sweden like other Nordic countries have implemented a digital identity, BankID, which claims to have eight million users (which would be nearly 80% of the Swedish population).

“This uses the Swedish identity card system to create a verified identity that can be used to open a bank account or access other services.”