A special investigation has been ordered into the treatment of ‘financially vulnerable’ customers by Britain’s banks and other financial institutions.
MPs from the powerful Treasury Select Committee will examine what banks are doing to stop financial exclusion and how they are being held to account for their treatment of vulnerable customers
The Financial Conduct Authority (FCA) and the Competition and Markets Authority (CMA) are already investigating whether some people are being over-charged for financial products.
The investigations follow claims by Citizens Advice that people are losing as much as £877 each because they are loyal customers of banks, insurance companies, broadband providers, insurance companies and mortgage providers.
Chief executive Gillian Guy said: “It’s completely unacceptable that consumers are still being ripped off for being loyal to companies they rely on every single day.
“As a result of this super-complaint, the CMA should come up with concrete measures to end this systematic scam.”
Treasury Committee chairman Nicky Morgan said their investigation would concentrate on how much access customers have to financial services, focusing on the most vulnerable in society.
She said: “Vulnerability, as defined by the FCA, is where someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.
“With customers expected to take more responsibility for their financial planning and resilience, bank branches closing, and the number of free-to-use ATMs falling, it’s becoming increasingly difficult for vulnerable customers to access certain financial services.”
The inquiry will examine:
- how financial firms define “vulnerability”
- whether firms should have to have a legal duty of care to their customers
- which customers suffer most when a bank branch closes
- how Post Offices are filling the gap after a bank branch closure
Money expert Gareth Shaw, of the Which? consumer group, commented: “Rapid changes to the financial landscape risk excluding a significant amount of people from access to vital financial services and cash, notably through the double blow of bank branch and cashpoint closures, which continue at an alarming rate.
“We know such closures hit rural communities especially hard, with poorer and elderly people most likely to suffer the impact.”
A recent report by the Office for National Statistics (ONS) says a third of all bank branches in the UK have been closed in the last eight years.
More than 6,000 have been closed nationwide, with more than 13 million people losing access to their local branch.
The closures have been blamed on a switch by the way people access their cash with a massive surge in online and telephone banking meaning many customers never need to go into a branch any more