British MPs versus Lloyds and RBS

• British MPs are voicing their discontent at the measures set up last year by RBS, in line with Lloyds TSB’s former decision, to restrict Basic Account holders’ access to ATM withdrawals.

• According to the Treasury Committee “[in] this instance, the financial benefits to Lloyds and RBS appear relatively small but those affected would be amongst the most vulnerable people in society”. A dedicated report has just been released: Access to cash machines for basic bank account holders and the Committee remains eager to improve overall financial inclusion, explaining that the amounts saved through implementing these policies (about 10 pounds per account at RBS and 12 for Lloyds) do not compare to the issues at stake and additional inconvenience.

• Also, this policy deemed “regrettable” by the Committee denies the mere essence of these accounts originally designed to improve banking rates.

• MPs are urging Lloyds TSB and RBS to change their mind and drop these restrictions. Barclays, HSBC and Santander for their part have committed not to impose likewise policies.

Source: www.parliament.uk

• Basic bank Accounts are proposed to customers who do not meet conventional personal current accounts opening criteria; they only include few services (no overdraft, no chequebook, and, sometimes even no debit card, for example). Subscribers can however receive funds (wages, benefits, etc.), set recurring payments (invoices, etc.) and better manage their budget.

• In 2005, the Financial Inclusion Taskforce was founded to help the government with financial inclusion issues: regarding which, the independent body insists on the key part played by Basic bank Accounts in improving banking rates. Today, the Treasury Committee is growing worried that these limitations might last and become dissuasive for potential customers, impact banks and independent ATM networks.

• Lloyds TSB went for this policy in 2006, and, in 2011, RBS opted for the same restrictions (see August 2011 Insight). From then on, the institutions have been criticised by consumer protection associations.