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BASIC BANK ACCOUNT MYSTERY SHOPPING

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					MYSTERY SHOPPING REVIEW OF THE
 PROVISION OF INFORMATION ON
     BASIC BANK ACCOUNTS

        SUMMARY RESULTS



           March 2008
BASIC BANK ACCOUNT MYSTERY SHOPPING

SUMMARY RESULTS

1.    Background

Basic Bank Accounts were developed jointly by Government and the
banking industry to assist in addressing the problem of financial exclusion.
They are offered by 17 subscribers to the Banking Code. Although designed
with limited functionality, they have a number of common features:

    Income from employers and state benefits can be paid directly into the
     account.
    Cheques and cash can be paid into the account
    Direct Debits and on most accounts Standing Orders can be operated
    Cash can be withdrawn at ATMs
    Basic accounts do not offer borrowing such as overdrafts or credit
     cards

Figures from the British Bankers Association at 6 December 2007 indicate
that around 50,000 basic accounts are being opened each month, with the
total number of Post Office accessible accounts now standing at 3.35m.

The Banking Code requires that providers of these accounts should:

    assess whether an applicant’s needs are suited to a basic bank account
     and if they are, to offer one
    offer a basic bank account if specifically requested by someone
     meeting the qualifying conditions
    make reference to the availability of the subscriber’s Basic Bank
     Account and how to get further information where subscribers provide
     front of house literature for their current account range
    normally to carry out identification in branches so that there is no need
     to send personal documents to a centralised opening unit
    ensure that accounts are operational no more than 10 working days
     from completion of necessary identification and address validation
     checks

Full details of the Code’s requirements are shown at Appendix 1.

2.    Mystery shopping exercises

The BCSB has undertaken a number of mystery shopping exercises
regarding the provision of these accounts since their introduction in 2001.
The previous review undertaken in 2007 by an independent mystery
shopping agency included 1,436 attempts to obtain information about a
basic account. We found in that exercise that although account opening
timescales were being met in almost all cases and literature was widely
available, some staff did not recognise the need for a basic account and/or
were not ready to offer one when it would be appropriate.

During the first quarter of 2008, the BCSB undertook a smaller scale survey
to identify whether, following feedback provided to firms in 2007, staff were
now ready and able to identify and offer a basic account. The review
included unannounced visits to 10 branches of each provider and it was
again carried out on a mystery shopping basis. (See Appendix 2 for basic
account providers and Appendix 3 for mystery shopping briefs).
                                 2                                 March 2008
3.    Conclusions

The results of the mystery shopping approaches were:

Applicant obtained information/literature without difficulties      86%
Applicant obtained information/literature but had some               8%
difficulties
Applicant was unable to obtain any information/literature            2%
Member of staff tried to persuade shopper to take a different        4%
account

In the great majority of cases, we were able to obtain information about
basic bank accounts and in only 2% of cases was literature not forthcoming.
Where difficulties were encountered, they were generally that staff wrongly
advised that basic accounts were only suitable for people with poor credit
records or they felt that a different, more complex account (typically
offering credit) would be more suitable. In each case where issues were
identified, feedback has been given to firms individually.

We have concluded that the work that has been done by providers, the
enhancements to the Code and the monitoring carried out by the BCSB has
led to basic accounts becoming more readily available and where an
individual is financially excluded, that they should be able to obtain
information and open a basic bank account relatively easily.

We remain committed to ensuring that the provisions of the Banking Code
continue to be observed in this area and although we are not at this stage
proposing further large scale mystery shopping exercises, we will maintain
close watch through our ongoing monitoring of subscribers’ Code
compliance more generally.




                                3                              March 2008
APPENDIX 1 - Extract from the Banking Code and Guidance

3.   Helping you to choose products and services which meet your
      needs

3.1 Before you become a customer, we will:

    give you clear information explaining the key features of the services
     and products you tell us you are interested in;

    assess whether your needs are suited to a basic bank account (if we
     offer one) and if they are we will offer you this product;

    offer you a basic bank account if you specifically ask and meet the
     qualifying conditions for one;

     This provision only applies to subscribers who offer a basic bank
     account product as a result of the agreement between the
     Government and the industry in the wake of PAT14. If in doubt the
     FSA’s website carries a list of such institutions. It requires subscribers
     who offer a basic bank account to inform certain customers about the
     account and how to open one.

     These are customers for whom the basic bank account would appear to
     be appropriate. Such customers may include those:

      who express an interest in opening a money transmission (current)
       account which does not allow them to go overdrawn;
      whose main source of income appears to be state benefit;
      who are content to accept the limited money transmission
       functionality of a basic account (eg, no cheque book).

     There is no requirement for subscribers to keep records of any
     assessment. This does not preclude other products being explained
     where it is appropriate.

     If there is a history of fraud or undischarged debts, a subscriber is not
     bound to open an account. If the customer already holds a suitable
     account with the bank, a subscriber is not bound to open a basic bank
     account.

    give you information on a single product or service, if you have already
     made up your mind; and

    tell you what information we need from you to prove your identity (by
     law, we have to check your identity).

3.2 We will tell you if we offer products and services in more than one way
    (for example, on the internet, over the phone, in branches and so on)
    and tell you how to find out more about them. Where we offer basic
    bank accounts, we will tell you if they can be used at post offices.

     Basic bank account customers should be told if they can make cash
     withdrawals at post offices.




                                  4                                 March 2008
Code Guidance introduced in August 2006

Availability of literature

Subscribers who provide front of house literature for their current account
range should ensure that such literature includes reference to the
availability of the subscriber’s Basic Bank Account (if they have one), and
how to get further information. This reference might take the form of a
separate piece of literature or text within an existing leaflet.

ID + V

Where possible, subscribers should normally verify ID in branch for Basic
Bank Account applications. If a subscriber operates a central account-
opening service, it should offer the option for certified copies of ID&V
documents to be sent to the central unit rather than original documents.

Account opening timescale

A Basic Bank Account should take no longer than 10 working days to
become operational. The 10 working days are counted from the date the
customer’s application is approved, i.e. once any necessary identification
and address validation checks have been completed. ‘Operational’ means
the ability to pay into and make withdrawals from the account (i.e. via a
branch counter or an ATM).




                                5                              March 2008
APPENDIX 2 - Subscribers visited during this review


     Abbey National plc

     Alliance & Leicester plc

     Bank of Ireland (Northern Ireland)

     Barclays Bank PLC

     Clydesdale Bank PLC

     Co-operative Bank p.l.c.

     First Trust Bank

     HBOS plc (Including Halifax and Bank of Scotland)

     HSBC Bank plc

     Lloyds TSB Bank plc

     Nationwide Building Society

     National Westminster Bank Plc

     Northern Bank Limited

     Royal Bank of Scotland plc

     Ulster Bank Limited

     Yorkshire Bank PLC




                                  6                      March 2008
APPENDIX 3 – Details of scenarios used

Scenario 1 - Straightforward account for elderly relative
Shopper aged 25-60 – can choose whether you are making the enquiry on
behalf of a parent, aunt or uncle.

Your relative receives a pension – they have been drawing their benefit
payment in cash from a Post Office– they have a small income that they
would like to pay into an account- they will be highly unlikely to build up a
significant balance and will not need an overdraft.

The person needs access to enable them to withdraw at the local Post
Office and will not want any credit cards or cheque books. You are looking
for advice and guidance only and want to take an application form away
so that you can guide them on completing it.

You are not sure whether the relative has a passport but they definitely do
not hold a driving licence. You will want to know how flexible the bank can
be about identification


Scenario 2 - Enquiry for student son/daughter
Shopper needs to be aged around 40-55 for this enquiry to be plausible

Your son/daughter (18+) who is a student (A levels) requires a non credit
offering account. They live at home with you but they do not have a
driving licence nor passport.    They are named on your council tax
statement and they also have a National Insurance card. The college
would be able to confirm the course they are currently studying as well as
his/her address and they also have a student union card.             Your
son/daughter has also had a building society account since birth
(statements/correspondence available) but now requires their money to
be more readily accessible.

They have a part time paid job for a local charity and wages need to be
paid into a bank account. You are keen to ensure they do not get
themselves into large amounts of debt, you want something to provide
them with a cash card but do not want them having access to credit cards
or overdrafts.




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