Access to basic banking services could become significantly easier for the millions of Britons who currently struggle to open an account, following an agreement by major financial institutions to reform their practices.

The changes come after the Financial Conduct Authority conducted an investigation revealing that numerous individuals entitled to basic bank accounts were being rejected, channelled toward inappropriate digital application processes or simply not informed such products existed.

Basic bank accounts cater specifically to those unable to secure conventional current accounts, including individuals with adverse credit records, financial troubles or no stable residential address.

The FCA emphasised these accounts serve essential functions such as receiving salary payments, welfare benefits and settling household expenses, yet the investigation exposed systemic failings throughout the sector.

The regulator deployed 298 undercover assessments across bank branches and telephone channels.

The findings showed approximately one in five experiences were deemed substandard, with around one in seven classified as particularly poor. Fewer than three in ten interactions received positive ratings, while over a third fell into the acceptable category.

Examiners discovered branch employees frequently delayed mentioning basic account options, overlooked indicators of customer vulnerability and consistently directed applicants toward online processes unsuitable for their situations. Those lacking conventional identity documents or permanent addresses encountered particular obstacles.

Currently, roughly 4.3 million UK adults hold basic bank accounts, though the FCA believes approximately 900,000 people remain entirely outside the banking system.

In response to the findings, the country’s largest banks and building societies have pledged to enhance their basic account offerings.

The participating institutions comprise Barclays, The Co-operative Bank, HSBC, Lloyds Bank, Halifax, Bank of Scotland, Nationwide Building Society, NatWest, Royal Bank of Scotland, Ulster Bank, Santander, TSB and Virgin Money.

These firms have committed to ensuring customers receive the appropriate account immediately, simplifying the process for those without standard identification or fixed addresses, improving detection of vulnerable customers and presenting alternatives for individuals unable to navigate online applications.

Emad Aladhal, the FCA’s retail banking director, stated that while progress has been made with over 97% of UK adults now holding a current account, the regulator’s recent work demonstrates that firms’ customer interactions still frequently require improvement. He noted that bank accounts play a crucial role in financial inclusion and that the focus is ensuring those who could benefit most from basic accounts are not being excluded. The largest banks have now committed to improving their offering, and the FCA will be monitoring them closely to ensure implementation.

Peter Tyler, UK Finance’s personal banking director, commented that a basic bank account can represent an important initial step toward financial autonomy, and whilst the majority of holders report positive experiences, the industry acknowledges that consistent standards for all customers remain elusive. He explained that UK Finance and its members are dedicated to elevating sector standards and broadening access. The recently expanded breaking the cycle programme forms a central element of this effort, delivering practical assistance to those encountering obstacles to essential banking services, including individuals without stable accommodation.

Basic bank accounts are intended for individuals who have been declined a standard current account, possess a poor credit history, have been declared bankrupt, lack a fixed address, do not hold standard identification documents or require an account specifically to receive wages or benefits and settle bills.

Unlike standard current accounts, basic variants do not provide overdraft facilities, enabling customers to avoid debt whilst maintaining access to everyday banking facilities.