MPs scold banks over financial inclusion

The Treasury Committee has published a unanimously-agreed report on consumers’ access to financial services, warning that new technologies risk leaving people behind.

The group of MPs stated that a duty of care is an obligation to exercise reasonable care and skill when providing a product or service, noting that if the Financial Conduct Authority (FCA) can’t enforce such behaviour, the committee would support a legal duty of care, creating a legal obligation for firms to act in their customers’ best interests.

Reasonable adjustments that financial services providers should make include providing interpreters, tactile bank cards and tactile font communications.

Eleanor Southwood from the Royal National Institute of Blind People told the committee during evidence: “The other day I got into a taxi and had to pay on my card, it was a touchscreen, I just had to give the driver my PIN; that is a deeply unsatisfactory arrangement.

“Why on earth should somebody who cannot see be putting themselves at that level of risk of financial crime, just because it is not accessible?”

The report explained that vulnerable people, such as the elderly or those on lower incomes, are more likely to be impacted by bank branch closures as they often rely on branches to carry out their banking needs.

The increasing number of IT failures within banks, and the inability of providers to serve their customers digitally during such service failures, shows why banks can’t rely solely on their digital channels to replace branches entirely, it read.

Many banks are also ushering customers towards the Post Office, a government-owned company providing basic banking services at a loss.

“Taxpayers should not be subsidising the big six banks’ lack of branches,” stated the committee. “In cases where the ‘last bank in town’ is due to close, banks should be required to provide and fund ‘banking hubs’ in the local Post Office, with adequately trained staff.”

The report also restated the need for free access to cash must be maintained for those who need it, imploring the government to implement the recommendations of the independent Access to Cash Review.

“Banks should follow Monzo’s lead on its voluntary block on gambling transactions,” read the committee’s statement. Some customers, as described to the committee by Katie Evans from the Money and Mental Health Policy Institute, have imposed blocks upon themselves.

“We know of people who are using cash to manage spending when they are unwell because they cannot turn on clever settings on their cards,” she explained. “At best, I have heard of people literally putting their credit cards in a Tupperware full of water and putting it in the freezer, which is fantastic: how clever for someone to come up with that system for themselves, to try to put in place the friction they need when they are unwell.”

There is scope for banks to do more to help consumers with other types of spending blocks, but they are restricted by a lack of data, noted the committee. “For example, an alcohol purchasing block is possible, however, the current lack of data means that a supermarket cannot distinguish between an alcohol purchase and anything else.”

Nicky Morgan, chair of the committee, said: “The financial inclusion of vulnerable consumers – and we can all be vulnerable at some point in our lives – should be of the utmost priority for financial services providers, the government, and financial regulators.”

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