In today’s society we all need a bank account. They are used for the basics, such as buying food, paying bills and making online payments. Without a bank account we are lost in society. For most people in the UK our wages are paid into a bank account by our employers on a PAYE system. Employers prefer
The Co-Operative bank has removed their free basic bank account product for people who are undischarged bankrupts. Barclays and the Co-Operative bank were the only two banks to offer a free banking service to people who were undischarged bankrupts.
The bank accounts allow a person to have their wages paid into their bank and make payment online or in person via a Visa card. The accounts come with a cheque book but an overdraft is never permitted. An unauthorised overdraft can still be added onto the account meaning money could be owed by the person in debt to the banks.
Discrimination of Bankrupts
Bankrupts are being discriminated against in society because of a financial mistake they made. People in prison, who have committed murderous crimes can own a bank account, but undischarged bankrupts are not allowed.
Politicians are progressing legislation to state that every person should have a bank account for an equal and fair society. However in today’s society there is still a stigma and discrimination over people who have been made bankrupt. It’s a discrimination I feel is unfair.
Bankrupts deserve to pay the price for being made bankrupt. When a person borrows money they do so under good faith that they will pay the money back. If somebody doesn’t pay the money back and enters bankruptcy, then the debt is written off at the end of the solution. The person who has been made bankrupt will have a negative credit rating for 6 years. Friends and family will undoubtedly know they’ve been made bankrupt, employers could find out and personal relationships will be severely affected.
This is the punishment of being made bankrupt.
Excluding people from society is not a punishment; it’s barbaric! In today’s society it’s the equivalent of being told a bankrupt can’t take public transport, a bankrupt can’t sit in the same cinema as other ‘normal’ people or that a bankrupt must wear a special sign to signify their error. Failing to own a bank account is as serious as being completely removed from society.
Should We Praise or Condemn Co-Operative?
I questioned, angrily, the Co-Operative’s motives for removing the basic bank account. I could understand they were putting their business at risk, but if a new customer comes to them, gives them their custom at a vulnerable time in their life, then surely that customer would stay with the bank long term.
After reading a lot about the basic bank accounts provided by the Co-Operative it was clear the Co-Operative Bank has been carrying the free banking sector for bankrupts for many years. The C0-Operative bank has 330,000 basic bank account customers, 30% of which have been made bankrupt or entered an insolvency solution. Other banks have automatically refused to accept any customers who are undischarged bankrupts. So, should be praise or condemn Co-Op?
I say, praise. They’ve been helping bankrupts get a basic bank account for years. It’s now become impossible for the Co-Op, along with Barclays, to provide the free bank accounts for bankrupts. Every other bank should be made to offer a free banking service too, in my opinion.
The only people the Co-Operative refused to offer a bank account to was people who had committed fraud.
Barclays is the only bank offering a free bank account now for people who have been made bankrupt. However, if you owe Barclays money then opening a fresh bank account before you enter bankruptcy will not work – Barclays will close every account if you owe them any more.
Alternative Banking: What are the options?
Most people are now forced to seek alternative banking services if they can’t get a standard bank account. However these come at a risk and / or cost:
1. Charged Account: There are bank accounts where a monthly fee will be charged to hold the bank account. The fee is usually about £15 per month. For people who have no money to be charged £15 per month for the basic privilege of banking is immoral and a disgrace.
2. Ask a friend or family member to let you borrow an account they don’t use. This means a friend or family member will lend you a card for day to day life but if anything goes wrong, then the friend or family member is liable. This can put a strain on relationships.
3. Unless you can think of any other option? I can’t.
It raises interesting questions, such as, do bankrupts have the same rights as other people in civilisation? How far should somebody who has made a financial mistake be punished? Should the Government step in to offer a product which protects the bank but allows people to bank in the UK?
Most importantly, where do we go from here?
John The Bankruptcy Guy
As an ex-bankrupt, John has experienced the highs and lows of credit. It's with this knowledge that he writes Debt Advice Resource - to help others avoid, or navigate out of, the pitfalls of debt.
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