Basic bank account growth continues1
23/06/2006

There are two types of basic banking accounts; those operated through branches and ATMs, and those that can also be operated through post-office counters. HM Treasury monitoring of progress towards the shared financial inclusion goal is based on the latter type of account.

The first quarter of 2006 saw a net total (accounts opened less accounts closed) of 130,500 post office-accessible accounts opened and also 44,400 existing accounts upgraded to fuller featured accounts. Since the launch of Universal Banking in April 2003, a net total of over 1.8 million post office-accessible accounts have been opened and a further 126,000 upgraded.

Banks were offering basic accounts accessible through branches, mobile branches and ATMs well before the advent of Universal Banking. A net total of 630,400 such accounts have been opened and 164,500 upgraded since April 2003, with the total number of these accounts currently standing at 4 million.

Ian Mullen, chief executive of the BBA, said: "It is good to see customers upgrading from basic accounts, as the experience of a basic banking relationship leads to customers wanting, or being offered, more fully featured accounts. Together with another 130,500 post office accessible accounts being opened, the industry continues to contribute to the Government's financial inclusion measure."

For further information, please contact:
BBA Press Office (020 7216 8989)
Joanna Elson, Executive Director, Retail (020 7216 8849)

Notes to Editors

1. There are two types of basic banking accounts; those operated through branches and ATMs, and those that can also be operated through post office counters.  HM Treasury monitoring of progress towards the shared financial inclusion goal was based on the latter type of account.

2. There are 6,968,099 'Basic Bank Accounts' currently in operation. These accounts are designed for people who might not meet the banks' criteria for opening a standard current account or who want to ensure that they cannot overdraw their account. Account features typically include the ability for payments, e.g. pensions and benefits, to be credited directly to the account, for withdrawals by plastic card through cash machines and the facility to pay bills by direct debit, though they do not offer overdraft facilities nor, for example, a cheque book.  The accounts fall between two types:

a. Post-office accessible accounts Historically, around 750,000 'basic-functionality' bank accounts could be accessed at the post office but, from the launch of universal banking in April 2003, direct payment into bank accounts or Post Office Card Accounts became the normal method of payment for government benefits and tax credits. From that point sixteen banks have offered specific accounts that can be accessed through Post Office counters. Full details of these are published by the Financial Services Authority (FSA) both on their website and in their leaflet “Basic bank accounts - your questions answered”.  Monitoring these accounts formed the basis of measuring progress towards the shared financial inclusion goal with HM Treasury of making significant progress towards reducing the number of adults in unbanked households by half by November 2006, based on the figure of 2.8 million in April 2003. The numbers of accounts opened, net of closures, during each quarter were:

Since April 2003, 298,171 accounts have been upgraded to more fully featured accounts.  The total number of post-office accessible accounts stands at 3,170,178.

Banks offering accounts accessible through the Post Office are:

Abbey, Alliance & Leicester, Bank of Ireland, Bank of Scotland, Barclays Bank, Clydesdale/Yorkshire Bank, Co-operative Bank, First Trust Bank, Halifax, HSBC Bank, LloydsTSB, NatWest Bank, Northern Bank, The Royal Bank of Scotland, Ulster Bank.

b. Accounts accessible through branches and ATMs
In the context of ‘social banking’, these accounts were in existence long before the launch of universal banking, with some having been opened in the 1980’s and they operate alongside post-office accessible accounts.  Since April 2003, 207,888 accounts have been upgraded and, although some accounts will typically be closed by banks due to long-term dormancy or inactivity (In line with good practice), there are 3,797,921 of these accounts in existence.

3. Account 'upgrading'
Basic accounts are regarded as a convenient stepping stone to fuller-featured accounts for people without previous banking relationships.  As part of customer relationship management, banks will, when appropriate or on customer request, present options to move from a basic account to other accounts, e.g. a current account.  The term ‘upgrading’ is used in this release to reflect a customer closing a basic account in favour of opening a fuller-featured account with their bank.

4. Data contained in this release may have been re-stated from previous releases as a result of revised or improved data becoming available.