Post Office Accounts are Closing: Basic Bank Accounts

The decision by the Post Office to close its bank accounts has now been delayed until November 2022.

The reason for the delay is to allow people who currently get benefits paid into Post Office accounts, time to transfer to another. If people don’t own another account, and with over 1 million people in the UK not having bank accounts this could mean quite a few people, they will be moved onto the Payment Exception Service.  

Payment Exception Service

The Payment Exception Service will allow people to get their benefits paid from any Paypoint Outlet by using a digital voucher, which they can receive by

  • Email
  • Text Message
  • A Unique Barcode displayed on a mobile phone.  

They will also be provided with a reusable magnetic strip card that they can use.

What if you don’t own an account?

If you don’t own a bank account, most people in the UK are entitled to own one.  Our guide below explains your rights to have a basic bank account and how to open one.

Your Rights to a Basic Bank Account

Under the Payment Account Regulations 2015, there are nine British banks that are required by law to provide you with a basic bank account, providing you meet certain criteria.

These banks are:

  • Barclays,
  • Clydesdale and Yorkshire Bank,
  • Co-operative Bank,
  • HSBC,
  • Lloyds Banking Group (including Halifax and Bank of Scotland brands),
  • Nationwide,
  • Royal Bank of Scotland (including NatWest and Ulster Bank brands),
  • Santander; and
  • TSB

When does a Bank have to provide you with a Basic Bank Account?

For one of these banks to be required by law to provide you with a bank account, you must:

  • Be legally resident within the UK;
  • Not hold another bank account with another institution;
  • Not be eligible for any other account with the institution that is not a basic bank account;
  • Where you have another account with another bank, you should not be treated as having an account with another credit institution, if you have been told to close that account.

What must a Basic Bank Account allow you to do?

A basic bank account should have several features. These are:

  • They should allow you to deposit and withdraw money at their branch;
  • They should be free;
  • They should allow you online banking facilities;
  • They should allow you to withdraw money from an ATM machine;
  • They should allow you to set up direct debits, standing orders and to make electronic transfers;
  • ·It should not allow you to run up an overdraft.

When can a Bank refuse to allow you to open a Basic Account?

Banks can refuse to open a basic bank account if it would be unlawful for them to do so, or it would be contrary to:

  • The Fraud Act 2006;
  • The Money Laundering Act 2007;
  • Contrary to Section 40(d) of the Immigration Act 2014; or
  • ·Under Part 4A (f) of the Financial Services and Market Act 2000, the Bank is limited from taking on new business.

A Bank may also refuse to open an account if it believes the conduct of the customer may constitute and offence to one of its staff.

Someone being bankrupt or having a poor credit rating is not grounds for refusing to provide someone with a Basic Bank Account.

When can a Bank close a Basic Bank Account?

A Bank can only terminate a Basic Bank Account if one of the following conditions are met:

  • The consumer has knowingly used the account for illegal purposes;
  • There has been no transaction on the account for 24 months or more;
  • The consumer provided incorrect information when opening the account and had the correct information been provided, the application would have been refused;
  • The consumer is no longer legally resident in the EU;
  • The consumer has access to another bank account with the features of a basic account and this was opened after the account with them was opened;
  • The Bank considers the conduct of the Consumer constitutes an offence to one of their staff;

How quickly can a Bank close a Basic Bank Account?

A bank can close an account immediately if the consumer has used it for illegal purposes, or provided incorrect information when opening the account; or their conduct constitutes an offence against Bank staff.

If none of these conditions are met the Bank must give two months written notice of their intention to close the account and specify their reasons for doing so.

What can you do if you disagree with your Basic Bank Account being closed?

If you disagree with a Bank’s decision to close your account, you can make a complaint to the Bank.

Equally, if a Bank refuses to allow you to open a Basic Bank Account, you can make a complaint.

When closing your account, your Bank should advise you that you can make a complaint.

They should also advise you that if you are not happy with their proposed resolution of your complaint, you can make a complaint to the Financial Ombudsman Service.

 

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