The People Who Can’t Get Bank Accounts – Financial Exclusion in the UK

Over one million people in the UK are financially excluded and cannot access the most basic of banking facilities.

The ‘unbanked’ and ‘underbanked’ are often restricted by circumstances beyond their control and find themselves unable to get a basic bank account, making them financially excluded.

It is not a niche issue, 1.5 million people in the UK cannot access banking facilities, blocking their access secure payments, easy bill paying and savings. Due to numerous reasons, financial exclusion ultimately contributes to large numbers unbanked people becoming trapped in poverty.

How does Someone Become Financially Excluded?

There are several causes of financial exclusion in the UK, sometimes imposed upon them for reasons out of their control.

Debt, small or large, can automatically exclude people from services they might rely on to get back out of debt. Declared bankrupts have their bank accounts frozen and commit to living by an agreed budget, locking them out of essential services like overdrafts and credit cards.

Bankrupts, as well as those in Individual Voluntary Agreements (IVAs) or Debt Management Plans (DMPs) will find their problems inflated at a time when they need more help than ever.

Being unable to provide proof of address or being someone without a permanent UK residence can also restrict access to regular high street bank accounts. Migrant workers on low, cash-in-hand wages, for example, are typically denied a bank account due to their regularly changing addresses.

Anyone on low income is at risk of financial exclusion. Those in low earning jobs, single parents and those with disability frequently find themselves unable to use financial products.

Since some current accounts even require a £500 minimum monthly deposit to stay open part-time workers or freelancers with an irregular income might be left out

Poor credit history can be another contributing factor, even if someone has been extremely cautious with their spending and borrowing. If someone diligently pay their bills in full every month avoiding interest payments unfortunately, or even cynically, they are less useful to those who make money from interest paid in financial services.

For issues against their control, someone with a poorly filed credit record might be too big a risk for some financial services. Out of date contact details and addresses or missing information can all contribute.

What to do to Become Financially Included

First things first, you should try to get yourself any sort of bare-bones bank account you can. The sort of account you should look for offers a no-frills service without any extra banking features such as an overdraft or credit card. Its purpose is solely to slowly but surely improve your credit score which will eventually give you access to financial services.

Getting away from the high street can also be beneficial. Unlike well-established banks, modern alternatives frequently cater to people who are financially excluded. They often provide a better service too, tailored to help with exactly what you’re personally struggling with at the time.

Depending on the services you require a pre-paid debit card often does enough to help you access regular banking features whilst not having a traditional bank account.

These will not require proof of address, credit checks or National Insurance number checks and can give you access to a basic pre-paid current account. At Suits Me, for example, we can provide an account within minutes with instant access to online banking and mobile banking and a new debit cards within 3-5 working days.

Once you have a bank account, ensure all details are up to date so your credit history is as perfect as you can make it so the financial picture of you is fair and accurate.

Summary

It is important to remember that it is not always as easy as setting up a new bank account and starting again. The underbanked and unbanked of the UK require help and services with their interests in mind.

Modern banking solutions, like those provided by Suits Me, are working towards this by offering innovative alternatives to old-fashioned bank accounts that can provide unbanked people with solutions they otherwise would struggle to get.

Author Bio: Peter East is a professional content writer for Suits Me. He has training in BA Journalism and has an interest in political and data journalism. When not on the lookout for new stories he’s been developing a new podcast