Co-op has withdrawn its basic account, leaving undischarged bankrupts with only one provider in the market still willing to offer banking facilities.
The Cashminder account will no longer be open for new customers but remains available for existing customers to access.
Undischarged bankrupts face an uphill struggle to access even the most basic facilities, such as a bank account to deposit cheques and money. And until Co-op’s decision to pull out of the market, there were just two different providers offering an account…and now there is just one.
The banking industry has been slammed for leaving vulnerable groups exposed and simply protecting their own interests and the latest decision from Co-op would seem to support the view. However, Co-op executives said the bank was being left with a disproportionately high number of account holders with credit problems, due to the failure of other banks and it was merely seeking to redress the balance.
The director of services at Consumer Focus, Sarah Brooks, said that the decision by Co-op would hit those who can ‘least afford it’ and make it impossible for them to ‘participate in modern Britain’. Ms Brooks added that the move could even make it difficult for vulnerable groups to cash their benefit payments, as new government rules plan to make payments only via bank accounts.
The head of retail banking at Co-op, John Hughes, criticised what he described as an ‘unlevel playing field’ caused by the unwillingness of other banks to offer services to those with debt problems. Around one in three Co-op customers is subject to either a debt management plan or some other kind of financial order, a ratio which Mr Hughes says is far higher than the market average.
The Co-op says that if the government introduces a new initiative and other banks start to offer more services for debt-struck customers, it may do a u-turn.