A report released by the Financial Inclusion Commission has revealed that just below two million people in the United Kingdom do not hold a bank account.
This brings numerous disadvantages including less access to a range of services and products, whilst they also suffer from being charged around £1,300 more per annum. The report stated that these people were in effect detached from ìthe financial mains.î
The explanation for there being this number of people without one was that the majority of them had found themselves in debt or had a negative incident with their bank and as a result had decided to cancel their account. This is reflected by the fact that around two-thirds of these people without bank accounts now did have one in the past.
The Financial Inclusion Commission warned that the two million are in danger of being unable to deal with financial unpredictability and instability because of a lack of savings. The commission is made up of representatives from charitable foundations, the financial industry and those in political power.
The chairman of this commission, Sir Sherard Cowper-Coles, commented: ìOur vision is for everyone to enjoy decent financial health in the UK. That means every adult is connected to the banking system, has access to affordable credit, is encouraged to save, has the right insurance at the right price, and access to objective financial services advice.î
They have raised further concerns that the predicted transition in the financial world to digital banking will reinforce this divide and leave these people even more stranded. The report went on to highlight that the lack of a saving ethic in this country extended further than this two million.
It revealed that less than 50% of households in the United Kingdom were saving money and 13 million people in Britain did not have enough cash saved to support themselves for even a month long period if they were see their salary reduced by a quarter.
Furthermore, it warned that high-rate lending services had increased as a practice whilst illegal activity in the lending market was also on the rise. They concluded that there should be a financial health minister selected to regulate and prevent the rise of these problems.
A spokesperson from StepChange, a charitable foundation dealing with debt, stated: ìThere is a pressing need to provide better protections for people who fall into debt, and better incentives and mechanisms to help people save and build up financial resilience.î
A spokesperson for the Treasury responded to the report by stating: ìWe have taken a number of steps to tackle financial exclusion, including securing a landmark deal with the big banks on providing basic bank accounts for the most financially excluded, and committing £38 million to help credit unions grow as an alternative source of affordable credit for hard working people.î