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Lloyds fails on fee-free in no-frills bank accounts market
December 12, 2016 / 12:19 PM / a year ago

Lloyds fails on fee-free in no-frills bank accounts market

LONDON (Reuters) - Fewer than a tenth of the no-frills bank accounts provided by Lloyds Banking Group (LLOY.L) conform to new guidelines requiring such accounts to be fee-free, data from Britain’s finance ministry showed on Monday.

A man enters a Lloyds Bank branch in central London, Britain February 25, 2016. REUTERS/Paul Hackett

The data are the first official study of banks’ provision of these basic bank accounts in Britain since the Treasury department and nine biggest lenders agreed new guidelines in 2014 stipulating that such accounts should not charge any fees.

The rules, which came into force on Jan. 1 this year, are designed to widen access to banking and help vulnerable customers avoid running up huge fees by requiring banks to provide simple accounts that do not charge for basic services.

Lloyds provides half of the just under 8 million basic bank accounts in use in Britain, the data show. Fewer than 250,000 of the bank’s nearly 4 million accounts are fee-free according to the terms of the 2014 agreement, although all new accounts opened with the bank since the start of the year are.

“We welcome (the) data which shows that Lloyds Banking Group is opening 36% of the new basic bank accounts, demonstrating our commitment to support banking for all,” a spokesman for Lloyds said in an email to Reuters.

Seven of the nine participating banks said all of their basic accounts are fee-free and consistent with the terms of the agreement, the Treasury reported.

The data, which cover the first six months of this year, show that nearly half a million new basic bank accounts consistent with the new rules were opened in Britain this year, with Lloyds opening the most.

Basic bank accounts have been available in Britain for more than 10 years, but only since the voluntary agreement between the nine biggest lenders and the Treasury in 2014 have they been required to be fee-free.

The accounts are available to customers who do not have a bank account or are ineligible for a given bank’s standard current account.

Banks have said that providing such accounts to the financially vulnerable is a loss-making business for them, and larger lenders including Barclays and Co-Operative Bank have called on smaller lenders to share the burden.

Reporting By Lawrence White

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