Major UK banks and building societies are failing to provide adequate support to vulnerable customers, with a recent Financial Conduct Authority (FCA) investigation revealing that one-third of interactions regarding basic bank accounts were rated as poor or significantly substandard. This failure persists despite a legal mandate requiring the nine largest financial providers to offer accessible, no-fee, and no-overdraft basic accounts to eligible residents under the Payment Accounts Regulations 2015.
Regulatory Gaps In Banking Support
The FCA’s mystery shopping exercise, which analysed 298 interactions, highlighted a recurring trend where financial institutions steer customers towards online-only application processes. These digital-first strategies often exclude individuals without stable addresses or standard identification, directly undermining the purpose of basic banking tools.
Progress has been made with over 97% of UK adults having a current account, but our latest work shows that all too often banking firms’ engagement with customers still needs improvement. Bank accounts are important for financial inclusion, and this is about making sure the very people who could benefit from basic bank accounts are not missing out.
Speaking at a recent update, Emad Aladhal, Director of Retail Banking at the FCA, confirmed that firms have since committed to individual improvement plans. These measures are designed to enhance communication and accessibility, ensuring that those in vulnerable circumstances—including individuals affected by health conditions, low financial resilience, and digital exclusion—receive the support they require.
Impact And Future Compliance
The regulatory intervention follows the implementation of the 2023 Consumer Duty standards, which place a sharper onus on financial services to prioritise the needs of their users. By compelling banks to rectify these service gaps, the FCA aims to ensure that no resident is marginalised by automated, rigid processes that fail to account for complex life circumstances.
Financial institutions are expected to demonstrate measurable progress in their accessibility initiatives, with the FCA continuing to monitor compliance with these new corrective programmes.