Lloyds Banking Group fails to meet 'fee-free' basic account guidelines
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Version 0 of 1. Lloyds Banking Group is failing to meet “fee-free” guidelines for millions of its basic bank accounts, which are typically held by people on low incomes. Data published by the Treasury showed more than 3.6 million of the group’s customers were at risk of running up bank charges because their accounts did not conform to a voluntary agreement reached between the government and the major high street banks in 2014. The agreement was designed to widen access to high street banks and help vulnerable customers. Labour MP John Mann, a member of the Treasury select committee, said the Lloyds group, in which the taxpayer still has a near-8% stake, was guilty of unacceptable behaviour. It is understood one of the accounts affected is the Halifax Easycash account, where a customer can be hit with up to three £10 “returned item fees”a day in cases in which there is not enough money in the account to make a payment but and the bank refuses to allow them to go into the red. Basic bank accounts are aimed at those who do not have a bank account or are ineligible for a standard current account. But the Treasury said that in the past, some banks sought to cut the costs of providing these by charging fees when direct debits or standing orders bounced. These charges were in some cases “very high”, and some people were effectively “unbanked” after ending up saddled with significant overdrafts that left them unable to use their accounts , the Treasury added. In December 2014 the government reached a voluntary agreement with nine banking groups – including all the major high street names – which required them to offer fee-free banking from 1 January this year. The Treasury said there were now just under 8m basic bank accounts open in the UK, of which more than 4.1m met the 2014 agreement standards. However, that leaves more than 3.7m where customers are still not benefiting from completely fee-free banking. The vast majority of these are operated by the Lloyds group, which includes the Halifax and Bank of Scotland brands. The remainder – estimated at just under 100,000 – are operated by the Royal Bank of Scotland group, which is 73% taxpayer-owned. The Treasury indicated that banks had been encouraged to migrate customers on old basic bank accounts to ones that met the guidelines, but it said they were not “compelled” to do so. Mann said of the findings relating to the Lloyds group: “This is simply not good enough, and it’s time Lloyds were held responsible for their actions. Over 3 million customers don’t have the cheapest account possible, and that means they are potentially exposed to hidden fees.” He added: “The only way Lloyds will resolve this is if they are forced to act, and that’s why I am calling on the Treasury and the Financial Conduct Authority to fine them a percentage of their profits until this is resolved.” All of the basic bank accounts at the other seven groups – Barclays, Clydesdale/Yorkshire, the Co-operative Bank, HSBC, Nationwide, Santander and TSB – are fully compliant. The Treasury also revealed that the Lloyds group accounted for almost half of the basic bank account market. Lloyds has indicated it wrote to existing basic bank account customers and gave them the option to move. But some backbook customers were not eligible for the new accounts. A spokeswoman said: “We welcome HM Treasury’s data which shows that Lloyds Banking Group is opening 36% of the new basic bank accounts, demonstrating our commitment to support banking for all …We believe all banks have a responsibility to provide basic bank account facilities to customers who would be otherwise excluded, and today’s announcement highlights that the sector has a responsibility to do much more.” |