Basic bank account applications

A basic bank account is a basic banking facility like a current account, but with no overdraft facility and no fees and charges.[1]

The bank must allow the account holder to:

• set up direct debits and standing orders from the account

• initiate and manage transactions using a counter service and online banking

• have a payment card to use for purchases or withdraw cash at an ATM

A basic bank account provider must take steps to prevent the account holder from becoming overdrawn.[2]

Most people need to have a bank account when they start working or make a claim for benefits. They can have their money paid into the account, pay bills by direct debit and standing order, and use their cash card or debit card for goods and services.

People who do not have a bank account might encounter difficulties when they try to:

• claim DWP benefits

• apply for financial help from a local authority

• prove their income and expenses for a homeless application

• pass an identity check for private rented housing

• apply for legal aid to pay for a solicitor or legal adviser

Existing bank accounts

Some people already have a bank account that they are unable to use. This could happen because the account is:

• frozen due to insolvency or inactivity

• joint or shared with another person

• linked to a debt with the bank (including an overdraft)

Read more about how to resolve problems managing a bank account.

An agreement between the government and nine major banks requires them to provide a basic bank account to everyone who meets the basic criteria.[3]

Banks that must offer a basic bank account are:

• Barclays UK

• Co-operative Bank

• HSBC UK

• Lloyds Banking Group (including Halifax and Bank of Scotland)

• Nationwide Building Society

• NatWest Group (including Royal Bank of Scotland and Ulster Bank)

• Santander UK

• TSB

• Virgin Money 

Other banks not covered by the agreement can offer a basic bank account, but the account is not provided under the regulations, so the terms of the account could be changed.

Building societies

Some building societies offer a basic bank account.

A building society operates in a similar way to a bank. It is owned by its members. Building societies are regulated like banks, so they must follow FCA rules on the fair treatment of customers.

Credit unions

Credit unions offer accounts that can be used in the same way as basic bank accounts. They might offer a better counter service but online banking might not be as good.  

Credit unions are not regulated in the same way as banks. They are not required to follow FCA rules on the fair treatment of customers.[4]

Digital-only banks

Digital-only or 'challenger' banks are not covered by the legislation that require banks to offer basic bank accounts. They offer online accounts managed using an app. An applicant needs a smartphone and proof of identity.

Digital-only banks are required to follow FCA rules on the fair treatment of customers.

Banks offer a range of different banking options to meet their customers' needs. The bank must supply a copy of the account terms and conditions on request.[5]

What to look for

A basic bank account has no start-up or monthly fees. It allows the customer to have their wages and benefits paid in. The customer can set up standing orders and direct debits, and usually access online banking.

The bank might offer a different account with conditions attached for the level of income, or a requirement to pass a credit check.

Before someone applies for a basic bank account, they should check the terms and conditions by reading them online or asking someone at the bank.

The MoneyHelper website contains information about the main terms and conditions for individual bank accounts.

Will the bank run a credit check

Banks ask for permission to run a check about the person who applies for the account. For a basic bank account, the check is to make sure they are who they say they are.

The bank does not usually check the applicant's debt payment history for a basic bank account. If the bank carries out a check on someone's credit score it could indicate the bank is checking eligibility for a standard current account with an overdraft.

Does the account have any fees

Basic bank accounts have no charges at all.

Some bank accounts have a standard monthly fee or a fee for an unpaid direct debit or standing order.

The applicant can check whether the bank will apply any charges to their account.

Can the account go overdrawn

Some accounts can go overdrawn because the bank pays money out on request whether there are funds in the account or not.

The applicant can check whether the bank will allow them to go into an unauthorised overdraft, and whether the bank will charge them if they do.

A basic bank account does not provide an authorised overdraft facility and the bank must take reasonable steps to stop the customer going into an unauthorised overdraft.[6]

Is the banking service accessible

People who cannot access telephone or online banking and need to speak to bank staff in person should check that their bank has a counter service that is open at convenient times.

Professionals can help people with additional needs find out if the bank offers information in a format they can use. Banks must communicate information to their customers in a way that is clear, fair, and not misleading.

Most banks have signed up to follow the Standards of Lending Practice for Personal Customers. Banks should have policies in place to identify customers who are or may be vulnerable. Staff should be trained to deal with vulnerable customers sympathetically and positively.

The FCA has published guidance on the fair treatment of vulnerable customers.

Will the bank account be frozen after bankruptcy or a DRO

A person with debt problems might need to apply for an insolvency option like bankruptcy or a debt relief order. Some bank accounts are frozen if the customer applies for insolvency. They might not be able to access their wages or benefits, and important payments like standing orders for the rent or mortgage could be cancelled.

People who need to apply for bankruptcy or a DRO should check their account will not be frozen, so they have access to their money and can make priority payments.

A debt adviser can provide information about which banks do not freeze an account when the customer applies for bankruptcy or a DRO.

An adviser or caseworker could help their client or customer get a bank account.

Most banks accept applications in person or online, and have a tool on their website to check branch locations and opening hours.

What help an adviser can provide

Only firms and individuals with FCA authorisation to give financial advice can recommend a specific bank account.[7]

People without FCA authorisation can give someone guidance on available products, and help them to select the right one. Guidance about a bank account could include helping a person to:

• identify a range of suitable bank accounts

• understand the terms and conditions

• narrow down their options

• weigh up the pros and cons

An adviser or caseworker who provides guidance is normally responsible for the accuracy of the information they provide, but not for the final decision of the person they are helping.[8]

People often find it difficult to navigate the process of getting a bank account. Advisers and caseworkers could help to:

• remind them about their appointments

• arrange to accompany them to appointments

• refer them for specialist money and debt advice

Find out more about specialist money and debt advice.

Proof of identity and address

An applicant usually has to provide proof of their identity and address when opening a bank account. Some groups of people might find this difficult, including:

• people from abroad

• people with no fixed address

• prisoners or people on probation

Some banks accept a wider range of documents in branch.

Find out more about proof of ID and address to open a bank account.

People who are digitally excluded

People without access to the internet might find it difficult to apply for an account or manage their account using internet banking. Most high street banks have some accessible branches with a counter service.

Most high street banks offer a branch finder tool on their website. This is a good way to assess which bank has an accessible branch for the person and with opening times and contact details.

People whose first language is not English

It could be difficult to deal with a bank if the person's first language is not English.

The person or their adviser could ask the bank to:

• use interpreters and translation tools

• clearly explain any bank terminology

• allow friends or family to attend appointments

• make appointments longer to allow more time to talk

A bank must treat its customers fairly. It must pay attention to the information needs of its customers and communicate information to them in a way that is clear, fair, and not misleading.[9]

If the bank does not treat an applicant fairly, the applicant could make a complaint.

Banks are prohibited from opening a current account for anyone who fails an immigration check because they need leave to remain in the UK but do not have it.[10]

This can include people who entered the UK lawfully but lost their right to stay. For example, EU citizens who did not apply for settled status after Brexit.

Checks are carried out at the point of application and on a quarterly basis.[11] The bank must report the disqualified person to the Home Office if they fail a check for an existing account.

People who do not have leave to remain in the UK should get immigration advice before they apply for a bank account because of the risk of removal if the Home Office is notified.

The bank can only refuse an application for a basic bank account where:[12]

• granting it would be against the law

• it thinks the account would be used unlawfully

• the applicant has not consented to or not passed the appropriate checks

The person who applied for the account can ask the bank why their application was refused. The bank normally has to give a reason, but they do not have to be specific.

A bank account application could be refused because the applicant:

• lacks mental capacity to manage their affairs

• is suspected of fraud or money laundering

• supplies information that does not match their records

• fails an immigration check

• displays conduct that amounts to an offence against bank staff

The person can improve their chances of being accepted for an account if they provide accurate information about their previous addresses and any former names they have used.

Credit reference information

Banks can refuse an application if the information the person provides does not match records like the electoral register or information held by credit reference agencies about their whereabouts.

The bank might have refused the application because the person applied for an account other than a basic bank account, like a current account with an overdraft or rewards like free cinema tickets. If the bank states it has refused the account because the person did not pass a credit check, ask if there is another account the person can apply for.

Some banks automatically offer a basic bank account if the person fails a credit check for a higher-status account.

Fraud and money laundering

A bank must refuse to open a basic bank account for someone they believe will use it for fraud or money laundering.[13]

A CIFAS (Credit Industry Fraud Avoidance System) is a fraud marker against a person's name. Banks automatically search the CIFAS register when someone applies for an account. The marker can result in applications for credit being refused and can lead to the closure of an existing bank account.

The CIFAS marker can remain on the register for up to six years. Someone may not realise they have a marker against their name until they apply for financial services.

Applicant's conduct

A bank can refuse to open a basic bank account if the applicant's conduct towards staff amounts to an offence. This includes harassment and threatening, abusive or insulting words or behaviour causing the fear of violence.[14]

People who lack mental capacity

A person lacks mental capacity if they have an impairment or dysfunction of their mind or brain which means they are unable to make a decision for themselves. A person is unable to make a decision for themselves if they are unable to:[15]

• understand the information relevant to the decision

• retain the information

• use or weigh the information as part of decision making

• communicate their decision

Decisions about a person's mental capacity must be made with reference to the Mental Capacity Act 2005. The Act sets out principles which must be applied to everyone.

A person must:[16]

• be assumed to have capacity unless it is established they lack capacity

• not be treated as unable to make a decision unless all practicable steps have been taken without success

• not be treated as unable to make a decision just because they make an unwise decision

The Mental Capacity Act Code of Practice sets out a series of questions to be used by decision makers to help them reach a conclusion about an applicant's mental capacity.[17]

A person who lacks, or is losing, the capacity to manage their financial affairs could have help through a Power of Attorney, Court of Protection Order, or Appointeeship.[18]

Making a complaint

The applicant must be informed in writing and with a reason if the bank refuses to open a basic bank account. The bank does not need to give a reason if the person is suspected of fraud or money laundering.

Where a reason for the refusal is given, the applicant must be informed of the procedure for submitting a complaint against the refusal, their right to complain to the Financial Ombudsman Service, and the bank's relevant contact details.[19]

Find out more about making a complaint.

People who have been refused an account by their bank without a clear reason can use Shelter's template letter to complain.

Advisers and caseworkers can write on behalf of their clients as long as they enclose evidence of their authority to act.

Copy the template into an email

Ask the bank for the best email address to use to make a complaint.

(Use the subject: Refusal of basic bank account)

Dear bank manager

I came into your branch today to ask about a basic bank account.

I hoped to be able to open an account after seeing the information on your website (include a link to the bank's website).

A staff member told me that I could not open an account and I was not given a proper reason for this. Please can you send me a reason by email. Alternatively, I can collect a letter from the bank.

Please let me know if I can provide any more information to support my application. I would like to know if you have a list of acceptable documents on your website.

Under the FCA Principles for Business (FCA Handbook, PRIN 2.1) you must:

• treat customers fairly

• communicate with customers clearly

• pay attention to the information needs of customers

You must also follow FCA guidance on the fair treatment of vulnerable customers.

(You can include the following information if you choose to. You do not have to give personal information, and these are not conditions for a basic bank account.)

I believe I am at an extra disadvantage because of:

• my health conditions or disabilities

• my housing situation, finances or debts

• difficulties using computers or the internet

• difficulties understanding, speaking, reading or writing English

Please let me know how you intend to meet my needs as a customer.

Please respond as soon as possible and send me a copy of your complaints process.

Kind regards

Download the template

The person making the request can send the template as an email attachment or print it out:

• Word template: Refusal of basic bank account (docx, Xkb)

• OpenDocument template: Refusal of basic bank account (odt, Xkb)