Banks: ATM Charges Under Fire For Excluding the Poor



Banks to charge ATM fees against poorest account holders

Banks to charge ATM fees against poorest account holders

Basic bank accounts were introduced almost ten years ago after the Labour government lobbied for the rights of all people regardless of social status to have access to banking services.

The bank accounts offer no extras but allow people to have their wages paid in direct deposit and have bills debited from accounts.

80% of basic account holders affected

The Treasury figures report that between 2002 and 2008, nearly half of all people without bank accounts, with basic bank accounts in high majority. Of these people, over half, or 1.1 million, were from the lowest income bracket.

The move was important in providing inclusion, security, and convenience to all UK citizens.

However, recently the Royal Bank of Scotland announced that it plans to charge basic account holders an ATM fee when they withdraw their money from a rival bank’s cash machine.

Lloyds is set to charge basic bank account holders even when withdrawing from HBOS machines, despite the fact that the Lloyds Banking Group owns HBOS.

The argument from banks states that they must pay a fee per cash withdrawal that amounts to anywhere from 24p to 75p. Though this is true for all accounts, banks say that basic bank accounts do not generate enough revenue to offset the costs of these fees.

An estimated 5 million people will be affected by these changes, 80% of all people with basic bank accounts.

Threats to all bank accounts

These policies have come under fire because despite the reasoning that banks do not make enough money from basic bank accounts, the changes have made it so that only the poor are paying.

However, banks are saying that the threat of reforms from the recent Vickers report may change the way bank accounts operate for all.

Critics say that this indicates a growing trend of disenfranchising the poor and excluding them from financial services. Community organisations working with the poor to open bank accounts say that banks have made it harder to open new accounts. This comes as financial inclusion teams and community banking teams have been dissolved or merged with other departments in many large banks.

Though the coalition government has made no moves to stop banks from levying these charges on the poor, the recently-signed Merlin agreement may have made this impossible in any event.

The Merlin agreement was signed as a compact between the banks and government, stating that the government would pose no new taxes or regulate bank payscales, and in turn the banks would support economic growth through lending to small businesses.

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