Banks ban poorer customers
Customers with basic bank accounts will face limits on counter withdrawals and internet transfers as Alliance & Leicester and HSBC join other banks in imposing harsher rules.
The two high street banks are the latest to announce changes to key services, which they say are intended to align services and improve security.
From 1 July, Alliance & Leicester's basic cash account customers will no longer be allowed to take out amounts of less than £300 over the counter.
This move will bring it in line with the rest of the Santander group, which currently has a £300 limit in place.
Basic bank accounts are accounts with no credit facilities, which have no authorised or unauthorised overdraft and often no cheque book. Customers of these accounts are often limited to a cash card rather than a debit card.
Vera Cottrell, principal policy adviser for consumer champion Which?, says: "The fact this new rule is for basic bank account customers is particularly worrying. People who have these basic bank accounts - as a method of budgeting - need access to the ability to take out only £10 if they want to.
"Yes they can go to an ATM but they tend to be people who are more vulnerable and less comfortable with that method, and might actually need physical assistance."
Steve Gracey, spokesperson for the Alliance & Leicester, says: “The current minimum withdrawal for an A&L basic cash account is already £250 so there is a slight increase.
“But customers are able to withdraw smaller amounts from an ATM and can also access their funds through the Post Office network.
"If a customer has a special need to withdraw less than £300 we should be able to accommodate them.”
Gracey added that in the last 18 months, products within the A&L and Santander ranges have been evolving to ensure a smoother transition within the group.
This comes ahead of a full rebranding, scheduled for later in the year, when 278 branches of A&L will be renamed Santander.
“This [cash withdrawal limit] is probably the most significant change I’m aware of,” he says.
In a move to improve security, from 1 August, HSBC customers may be required to make a telephone call to confirm internet transfers.
If the payment is to someone a customer has not transferred cash to in the last 13 months, the transfer could be blocked until a call is made to confirm it.
Payments for utility bills and direct debits, however, will be unaffected.
Already in effect is a full branch ban for customers who opt for HSBC basic current accounts. They cannot make over-the-counter withdrawals at all and are therefore limited to ATM or Post Office services.
Back in April, Nationwide announced it would no longer provide a counter service to cash card customers wanting to withdraw less than £100, a rule that will come into effect on 7 June.
Customers using a debit card or passbook will still be able to withdraw smaller amounts of cash over the counter.
Cottrell says: "Overall there seems to be a tendency to drive certain types of customer away. The people who ultimately don't make much money, the banks don't want to give access to, or to let them take up staff time."
Barclays says it has no plans to introduce minimum in-branch cash withdrawals and adds it uses a “PINsentry” cardreader system for online banking, to ensure maximum security in internet transfers.
The RBS group, which includes NatWest, also uses cardreaders and has no current plans to introduce limits on cash withdrawals.
Lloyds Banking Group has no minimum sum on counter withdrawals, while Halifax limits its easycash account customers to in-branch withdrawals of £300.
A spokesperson for the bank said it is flexible about how it applies this policy and takes into account the needs of the elderly, visually impaired and those who find cash machines hard to use.
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
Issued by a bank as part of a current account and, in a nutshell, serves as electronic cash. Unlike a credit or charge card, where you get an interest-free period before you have to settle the bill, the funds spent on a debit card are withdrawn immediately from your current account. Unless you’ve arranged an overdraft, if you don’t have the cash in the account, you can’t spend it.