Customers open 4.1 million fee-free basic bank accounts

Over 4.1 million customers have opened completely free basic bank accounts as a result of a government led initiative.

The UK’s 9 biggest retail banks are providing the completely free basic bank accounts following a government led initiative to boost financial inclusion and ensure universal access to fee-free bank accounts.

The 2014 basic bank accounts agreement was aimed at consumers who might have previously been at risk of running up overdrafts and big bank charges can now open basic bank accounts that have all the functionality of a standard bank account but are fee-free, ensuring they can avoid charges for things like failed payments.

The new standard, agreed by the government and industry in late 2014, mean that over half of the UK’s 8 million basic bank account users are now using the fee-free banking, according to statistics published for the first time this week.

The latest data shows that there are just under eight million basic bank accounts open in the UK and of those, over 4 million already meet the 2014 agreement standards.

Since the 2014 agreement came into force on January 1 2016, nearly half a million basic bank accounts have been opened in the UK.

Accounts at seven out of the nine participating banks were found to be consistent with the 2014 agreement.

Lloyds and Nationwide have opened the most new basic bank accounts in the first half of 2016.

Lloyds account for almost half of the basic bank account market, while Nationwide, Clydesdale and Yorkshire and Co-op also have a larger market share of basic bank accounts than personal current accounts.

Economic Secretary to the Treasury, Simon Kirby, said: “Ensuring consumers have access to the financial services they need is a vital part of our plan to build an economy that works for everyone.

“That is why I am delighted nearly half a million people have opened fee-free basic bank accounts since January.

“There is still more to be done and I am determined to work with the industry to boost financial inclusion and make sure people have the resources they need to manage their finances.

Basic bank accounts have been available in the UK for over a decade, aimed at supporting financial inclusion for those without a bank account and are available to customers who either do not have a bank account or are ineligible for a bank’s standard current account.

Previous industry agreements on basic bank accounts were not prescriptive, but established that basic bank accounts should not charge the customer for everyday transactions, and should not be able to go overdrawn.

The design of the basic bank accounts offered by firms was first set out in a voluntary agreement between the industry and government in late 2014, which firms implemented in the course of 2015. The agreement required banks to offer fee-free banking from January 1 2016.

The 9 banks offering basic bank accounts are: