Banks turn their back on the bankrupt
Times are tough. In the 12 months to June, there were 35,456 bankruptcy orders in England and Wales alone, according to the Insolvency Service. Now, it is possible (and some would argue necessary) for an undischarged bankrupt* to get hold of a bank account, although this would have to be a basic type account, with no overdraft facility, no monthly fee and limited debit card capacity. However, while basic bank accounts are normally available to all, those available to undischarged bankrupts has now narrowed to a field of one.
Previously both Barclays and the Co-operative bank allowed bankrupts to take out an account, but after much corporate soul-searching, Co-op have decided to withdraw from the market, leaving these people without a choice of bank account provider. You could argue that beggars shouldn’t be blessed in the options department, but what happens if Barclays decline to offer you an account?
In this day and age, having a bank account is tantamount to a necessity. Many employers require salaries to be paid by credit transfer, and if you are scoffing at the thought of bankrupts with a job, the new Universal credit benefits system will also require a bank account for payment.
But Co-op are defending their right to remove themselves from the market. John Hughes, managing director of retail banking at the Co-op told the BBC: "Across the industry there has long been an un-level playing field in the provision of basic bank accounts, with our bank doing far more than most, and we have been calling for some time for this to be addressed."
And you have to feel they have a point. Co-op, even with the new branches and customers purchased from Lloyds TSB do not have a 30% share in the retail banking market, but claim that 30% of their customers have been through some kind of insolvency proceeding, representing about two-and-a-half times its "natural market share".
Robin Taylor, the Co-op's head of banking, told BBC News that a lot of people who were made bankrupt were already with a bank and should therefore be supported by the institution they were previously with. He also wants every major bank to take a share of the remainder.
So are (most of) the banks, Co-op included, being unfair? Surely taking on a bankrupt, particularly one who has already gone bad on you, must seem like throwing good money after bad to the banks, institutions more widely known for maximising shareholder profits than customer satisfaction. Unusually Barclays appear to be the hero of the blacklisted- is this suitable penance for their less-than-savoury shenanigans of recent times? Does anyone even care?
* a bankrupt is normally undischarged for 12 months following the bankruptcy order.