Banking reforms 'must help most vulnerable'

Thursday, 10 June 2010 12:00

By myfinances.co.uk staff

The government risks failing some of the most vulnerable people in Britain because its proposed reforms of the banking sector overlook the problem of those who are marginalised because they do not have access to a basic account, Consumer Focus has warned.

According to the organisation, around a million adults are "effectively pushed to the edges of the economy" because they have no bank account.

They do not have convenient access to cash through ATMs, can find it difficult to access mainstream credit and often miss out on savings because they cannot use direct debits or buy goods and services over the internet, it said.

Furthermore, they will find it increasingly difficult to receive their salary, as it is forecast that by 2018, just two per cent of employees will be paid in cash.

Consumer Focus said these people are financially excluded for a range of reasons, from practical issues like existing debts or literacy problems to mistrust of banks.

Chief executive Mike O'Connor CBE said: "If the current reform agenda does not take proper account of those on the margins of our banking system, it will have failed those consumers who need the most help."

In the March Budget, then chancellor Alistair Darling proposed introducing basic bank accounts for every adult in the UK.

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