The Chairman of the Treasury Select Committee (TSC), Andrew Tyrie MP, has written to the chief executives of RBS and Lloyds Banking Group raising concerns about their policy to restrict basic bank account holders from using cash machines owned by other banks.
Both banks are preventing basic bank account holders from withdrawing money from many automated teller machines (ATMs).
Basic bank accounts are typically taken out by less well-off consumers and while they offer many of the usual services provided by standard current accounts, they do not offer customers an overdraft facility.
The letter from the TSC is particularly pertinent as the banks concerned, RBS and the Lloyds Banking Group, are 83% and 43% owned by the government (or taxpayers) respectively.
Lack of access to cash machines
Andrew Tyrie MP said of the decision to contact the banks: ‘We are concerned about the restrictions Lloyds and RBS are placing on basic account holders access to other banks’ cash machines. This change threatens to leave many basic account holders at the two banks unable to access the majority of cash machines in the UK
‘A further danger is that this could signal the end of universal access to cash machines for all customers – a move which would stifle competition and be bad for consumers. We have written to both banks asking for an explanation of their policy to restrict access to cash machines for basic account holders.’
Which? supports Treasury Select Committee move
The fear is that consumers most at risk of financial exclusion with be hit by the move. RBS made its announcement to restrict basic bank account customers from using cash machines owned by other banks in August 2011, while Lloyds TSB already had similar restrictions in place.
Which? executive director Richard Lloyd says of the move by the banks: ‘By limiting access to ATMs for basic account holders, Lloyds and RBS are putting more pressure on some of their most financially vulnerable customers. Basic account holders will be inconvenienced and might incur extra costs when travelling to find a cash machine they can use.
‘Even worse, these changes could force them to stop using their account and go back to managing all of their money in cash – imposing extra costs at a time when they can least afford it.’
- 60 second guide to basic bank accounts – all you need to know about basic bank accounts
- Read about our campaign for better banks – how we think banks should conduct themselves
- Find a Which? Best Rate current account – we help you find the best account for your needs