Bankrupt people are being denied basic bank accounts

12 July 2010

some prick from a bankGoing through bankruptcy isn't a particularly pleasant experience. I've witnessed first hand the woe it causes. So imagine a further smack in the chops after you've gone through all that when you try getting a bank account.

More and more people going are being denied access to a basic bank account while going through bankruptcy despite the fact that there's no legal reason why they shouldn't be allowed one, according to a Citizen's Advice report.

There are 17 banks that provide basic, no-credit accounts yet only 2 of these are willing to offer them to people who have recently been made bankrupt.

Not good news, especially in light of the fact that the number of people applying for bankruptcy has risen by 249% since the beginning of the century, says a report in the Guardian. The Called to Account report has found that being denied access to a bank account is both "demoralising and impractical", which of course, makes it incredibly difficult for people going through bankruptcy to make a fresh start and take control of their money.

Currently, there's only the Co-operative Bank and Barclays who offer basic bank accounts with Santander, Bank of Ireland, Bank of Scotland, Clydesdale, First Trust Bank, the LloydsTSB group, HSBC, NatWest, Northern Bank, RBS, Ulster Bank, Yorkshire Bank and the Nationwide building society not offering anything to bankrupts.

Gillian Guy, chief executive of Citizens Advice, said: "Most people take having a bank account for granted, but without access to one basic tasks such as receiving wages or benefits and paying bills can become huge and costly obstacles to overcome, particularly for people who are often at a vulnerable point in their lives.

"The banks who exclude undischarged bankrupts say that they are concerned about potential liability. This just doesn't stack up – two banks that do offer these accounts have told us they experience no difficulties."

So where does this leave people? Well, those who can't access a bank account will invariably have to use the account of a friend or family member. If no-one is willing to let you use theirs, then chances are, no-one will be willing to give you a job if you don't have an account for your wages to be put into.

Hopefully, this report will put pressure on the abstaining banks and building societies to rectify this woeful state of affairs.

TOPICS:   Banking   Investments

20 comments

  • Codify
    Never quite understood the logic of denying basic bank accounts to the recently bankrupt. The whole point of basic bank accounts is that you can't get overdrawn/into further debt, so there is no risk to the bank.
  • Jake R.
    Perhaps these people who went bankrupt should have taken better care of their finances in the first place and lived within their means. While some who go bankrupt do so due to misfortune such as job loss and ill health, there are also many who live a lifestyle that is beyond their income. I live in a working class area yet I see plenty of people walking around with all the latest mod cons when I know for a fact that many don't work or are on a low wage. So how do they afford these "must have" gadgets? They beg, borrow and steal. Eventually it comes back to bite them in the ass. I don't blame a bank for not wanting to take on that kind of risk in the current climate.
  • Tom
    @Jake ... don't you think that part of the cause for the current economic climate is due to the banks and their irresponsible lending? It doesn't take much for someone earning just above the poverty line to borrow a bit from card A to pay card B "for a few days" ... this then snowballs and before they knew it, they are talking 1000's. However there are plenty of people on bennies whom have everything paid for them, and have plenty of surplus cash for the latest must-have toys.
  • The B.
    The problem here is that banks are morons and will offer those with a negaitive credit rating things that they shouldn't have (overdrafts, etc) because they like to fleece you, in order to stop themselves doing it to the bankrupt rather than actually sorting their shit out they deny them the account completely.
  • Will
    Its not just irresponsible lending, it is also irresponsible borrowing. I work for a debt collection agency and some of the credit files you see are truly shocking. People have up to 20 credit cards, all with £3/4k outstanding on them. They have to take some of the responsibilty. After having 3/4 that they have maxxed out, why would they continue to apply for more, when they cant service the ones they have already. Then the easy solution is go bankrupt. Its such a cop out these days. Ill run up a shit load of debt then just go bankrupt and not pay it back.
  • The B.
    Will, but this is after they've been blacklisted, why shouldn't they have access to an account that's locked down so that they can't go overdrawn? Because the banks have no control of their own marketing departments who seemingly don't even perform basic credit checks, trust me, I've worked in banks and some of the process flows are utterly shocking.
  • zed
    Hmmm. Not often commented on is the irritating fact that companies insist on having a bank account to receive wages.
  • Umbongo C.
    ^ it's more irratating when people want wages paid by cash or cheque instead of straight into the bank account the same as everyone else, which takes seconds to do, whereas it takes longer to obtain cash or raise a cheque. people need to sort themselves out. what kind of adult lives a life without a bank account (outwith the bankrupt people we are talking about here)? i wouldn't employ someone who didn't have a bank account. why should i have to arse around because someone else can't sort themselves out? and if they have went bankrupt at some point, it's not my fault is it?
  • lordfontelroy
    I have relatives who have gone bankrupt twice and they still p^ss money up the wall - it realy pisses me off - I have scrimped and savedall my life always paid my bilsl inc my mortgage which always came first - forgone the latets stuff - bought stuff second hand and fixed it - to be honest I still do this now - as I get more satisfaction than pissing £XXXX on a laptop etc - i still have an old xbox with XBMC on it works - dspite being able to go I only have a decent TV after buying stuff on ebay refurbing it and selling it on - after 18 months i was forced to buy a new tv as the 14 year old dies ( Fecker ) - and how the F6ck can they sit in the pub all day maybe im a tight bastard - I still love my Merc though perhaps i have my priorities wrong
  • Joe
    It is disgraceful that people can just 'declare themselves bankrupt' and then a few years later just start out again while others (several have posted above) work hard for their money and lifestyle. Can't help feeling much sympathy tbh unless someone was made bankrupt for reasons out of their control. Banks lending money left right and center is not a reason which is legitimate to blame. Those same ridiculous credit deals were available to everyone but some people have common sense and aren't bottom feeding scum bags that just take from the system and can say no. Work hard, play hard. No problems. Scroungers should be fed to the dogs. Fingers crossed this new Government looks like it might start to take some benefits away from the work-shy chavs whose sole purpose in life seems to be to procreate in order to rake in the benefits that you and I are paying for!
  • Mary R.
    I bet RBS and Nothern Rock still had bank accounts when they were going tits up
  • fullmoon
    I remember the times when banks setup a booth in shopping centre and giving away credit card with minimum 3k credit limit. I asked the promo guy he said the people who he weas signing up were not going through strict credit check. A friend of mine who arrived to UK a month ago was given 3k limit on his credit card after quick filling form in shopping centre. No proof of ID or address was asked to show.
  • cynical B.
    The Co-operative only offer basic bank accounts because it fits in with their ethical image. The Co-operative privately dislike people who apply for these accounts which is why they offer a 3 strike rule for anybody who dares spend a penny more than they actually have. And, instead of not letting these people spend more than they have, the coop apply charges for bounced regular payments the same as every other mother bank account and then get rid of the scrubbers.
  • Halfmoon
    @bob Thats a complete load of nonesense,and to call people who have gone bankrupt "scrubbers" just shows you know nothing at all. As stated above sometimes people at no fault of their own are put in these postions,due to job loss ect.They may have not had credit cards just a normal working class morgage,and with the current climate the jobs on offer can noway accomadate the morgage re-payments. Plus you also have to bare inmind that the goverment is shedding 1000's of jobs.. Bottom line,you could be next!!..
  • Miss P.
    As Someone who has been declared bankrupt last year think some of you need to have a reality check as you don't now what you are talking about. I'm 27 luckily had always been employed since the day I left school until Jan 2009 when I was made redundant I lost my home my car and I DID NOT have credit cards Catalogs store cards or anything Else I just simply could not afford to pay my mortgage my bills an general car cost to travel to jobs on the £55 a week the dole gave me. I'm now out of my Bankruptcy Have a good job but I still cant have a simple bank account to pay bills an wages into I'm lucky my boss gives me a cheque to cash for my wage. however as i work away a lot I'm often not home when the post office is open to pay bills no debit card to pay over the phone an get charged when i cant get to the post office on a Saturday morning. Its no the wonder people struggle its one problem after another an no one cares or can offer any help. So you don't have to be 1000's an 1000's of debt to loose everything id always been good with money an carefull but my situation was out of my control. Don't count your chickens it could be you. Maybe then you will realise how hard, upsetting and stressfull it is you very small minded people!!!!!!!!!!!
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  • James R.
    Fortunately this argument is becoming increasingly redundant these days, because as most of the banks gradually disappear up this own arrogant backsides, those who have had the misfortune to have been made bankrupt and are being denied a basic bank account can apply for any one of the many pre-paid credit card accounts out there. Unlike their name suggests, there is no credit available here, nor do they carry out any credit checks before opening an account. You can have benefits/wages credited directly to the account, able to use ATMs, transfer money in and out of the account on line, pay for your on-line and off-line shopping/bills/daily expenses etc. What's more, with these accounts, it it physically impossible to go overdrawn, and for those offering direct debit services, there are zero charges if your DD bounces due to insufficient funds: the DD just simply does not get paid. In fact, there are few remaining reasons why anyone WOULD opt for a traditional bank account these days: basic or not. So, stick two fingers up at the banks and go for one of these accounts: just type in 'prepaid credit card' in to your favourite search engine and make up your own mind! Best of luck. xx
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