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Debt charity urges banks to provide bank accounts to bankrupts
Wednesday 14th July 2010The Citizens Advice Bureau (CAB) has published a report urging banks and building societies to change their policies and stop discriminating against undischarged bankrupts.
In Called to account: Why banks must provide basic bank accounts to undischarged bankrupts,CAB outlines the importance of providing undischarged bankrupts with basic bank accounts in order for them to continue with their lives.
“When someone is made bankrupt their life does not stop. Wages still need to be earned or benefit income received. Bills still need to be paid,” the report states.
According to CAB, out of the 17 account providers questioned, only two – Barclays and The Co-operative – allow undischarged bankrupts to open a bank account, a fact that sits uncomfortably with CAB.
“This report highlights the major difficulties faced by undischarged bankrupts unable to open a basic bank account. We consider why it is that the majority of banks and building societies refuse to offer their basic bank accounts to this group of people.
“We conclude that their position is unjustifiable and we therefore call upon these banks to change their policies.”
CAB estimates that in England and Wales 75,000 people were made bankrupt in 2009, and says it has seen bankruptcy enquiries grow by an annual rate of ten per cent a year.
Whilst many bankruptcy orders are a direct response to the recession, and the unforeseen circumstances individuals have had to face, the attitudes of account providers have not adapted to the change and many bankrupts have been left out in the cold.
CAB found that the banks’ continual reluctance to provide basic bank accounts has left bankrupts feeling demoralised and rejected.
One CAB advisor said: “The experience of visiting many banks, only to be turned away, is not only inconvenient and time consuming, it can also be extremely demoralising.
“One client, Jon, said he had visited approximately 20 banks, and felt that he had been treated ‘like a leper.’”
Over 89 per cent of workers receive their wages directly into their bank accounts, so the practical effects of not having an account can make life very complicated and an added burden to the employer as well as the employee, as paying wages other than direct debit can be more expensive and time consuming.
Commenting on the report, Kevin Still, debt expert and director of debt solutions provider EuroDebt, pointed to the availability of pre-paid bank accounts from Secure Trust Bank, available for people on Debt Management Plans (DMPs), Individual Voluntary Arrangements (IVAs) and subject to bankruptcy.
He said: “Our own Prepaid Current Account provides all the facilities of a normal current account along with a top rate on-line banking facility with the ease of transferring direct debits and standing orders in a matter of minutes.
“The costs are totally transparent and eligibility is simply based upon residency with no credit checks.”
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