0119 GMT July 19, 2019
The 1.2 million so-called unbanked individuals are said to pay a ‘banking poverty premium’ because they are missing out on preferential deals and discounts on utility bills, mobile phone contracts, broadband and personal loans, according to theguardian.com.
About 15 to 20 years ago there were thought to be 2.5 million people in the UK without basic banking facilities. The rollout of no-frills basic accounts combined with advances in technology meant that by 2017, the estimated number had fallen to 1.23 million However, the government said last month “this is still 1.23 million too many”.
People who have found it difficult to open a bank account include some migrants, those who cannot provide proof of a UK address, and individuals with poor credit histories. There are also some people who for varying reasons do not want a bank account.
The report was issued by Pockit, a digital current account provider with almost 500,000 UK customers.
It analyzed official data and pricing information to calculate the banking poverty premium figure. The company looked at electricity and gas, mobile data, broadband and the interest on a 52-week loan of £300, and said the average annual cost for all these totaled £1,118 for people with a bank account. The equivalent figure for unbanked individuals was £1,603.
The extra £485 reflects the fact that, for example, energy, broadband and mobile phone providers often offer discounts and better deals to customers if they pay by direct debit — savings that are not available to those without a bank account. The unbanked also often have limited options when looking for credit.
Last month, the government’s financial inclusion report said those more likely to be without a bank account included 18- to 24-year-olds and the unemployed, which it said might help to explain the higher-than-average levels of the unbanked in London and big cities.
The document, issued by the Treasury and the Department for Work and Pensions, stated that the government was “committed to helping all consumers across the UK access suitable banking products and supports a variety of options across the financial services market”.
It added, “We are working closely with industry to improve access to basic bank accounts, which are specifically designed to support the unbanked, but also work to promote awareness of local credit unions.”