UK Banks Face FCA Heat as 1 in 3 Basic Account Visits Rated Poor

Nine of the UK’s biggest banks are on notice. The Financial Conduct Authority wrapped up a mystery shopping exercise that found roughly a third of interactions around basic bank accounts were rated poorly — and now the regulator wants action plans, not apologies.

The FCA tested 298 interactions across branches and phone lines. Of those, 20% came back rated poor and another 14% rated very poor. That’s a combined 34% of encounters that failed customers who, in many cases, had nowhere else to turn. The two scenarios used during the exercise weren’t exotic edge cases either. One involved someone in financial hardship carrying non-standard identification. The other involved a person who’d been through bankruptcy but did have standard ID. Both are real-life situations banks encounter constantly — and both exposed serious gaps in how staff handled things.

What the Numbers Actually Say

The FCA’s Financial Lives survey from 2024 put some hard numbers on the problem. Around 0.9 million UK adults remain completely unbanked. Out of the 1.3 million adults who tried to open a basic bank account in the two years up to May 2024, 10% said they were turned away. And over 97% of UK adults already hold a current account — so the people still outside that system aren’t a huge population, but they’re probably the most vulnerable ones.

Not really a rounding error.

The core failure the FCA kept running into was simple: banks weren’t offering basic accounts to people who qualified for them. Customers without a fixed address or without standard identification — exactly the people basic accounts exist to serve — were often steered toward online-only applications instead. For someone without stable internet access or much experience navigating digital banking, that’s basically a dead end. Staff weren’t catching vulnerability early enough, weren’t flagging alternatives, and weren’t making the process work for people who needed the most help.

Nine Banks, Individual Plans, One Deadline

Barclays UK, HSBC UK, and NatWest Group are among the nine banks that have agreed to develop individual improvement plans. The commitments are pretty specific: get customers into the right account on the first visit, improve communication around eligibility, and cut down the barriers for people who can’t produce a passport or utility bill. UK Finance also locked in a collective commitment to lift industry standards across the board and push for wider access to these accounts.

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Emad Aladhal, the FCA’s director of retail banking, was careful not to say everything is fine. He acknowledged progress has been made — but made clear banks still need to do more to genuinely support financial inclusion. The FCA isn’t stepping back from oversight while the improvement plans roll out. It’s staying in the room.

Peter Tyler, director of personal banking at UK Finance, framed basic bank accounts as a stepping stone toward financial independence. Most customers, he said, do have positive experiences. But the point of the commitment is to make sure that’s consistent — not just a lucky outcome depending on which branch you walk into or which staff member picks up the phone. UK Finance’s expanded Breaking the Cycle initiative is part of that push, offering practical support to people who keep hitting walls when they try to access basic financial services.

The Bigger Picture on Financial Inclusion

Basic bank accounts have a legal mandate behind them. Banks covered by the rules are required to offer them. So the FCA’s findings aren’t just about poor customer service — they’re about institutions not consistently doing something they’re legally supposed to do. That’s a different kind of problem.

The gap between the 97%-plus of adults with current accounts and the roughly 0.9 million still unbanked might sound small. But for the people in that gap, it’s not. No bank account means getting paid in cash or expensive prepaid cards. It means no direct debit, no standing order, no easy way to pay rent or utilities. It can make it harder to rent a flat, harder to get a job, harder to build any kind of financial stability. The FCA’s push here isn’t abstract policy work — it’s trying to close a door that keeps swinging shut on people who can least afford it.

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Banks will now move forward with their individual plans. The FCA will monitor compliance and check whether the changes actually produce better outcomes, not just better paperwork. If the improvement plans don’t translate into real results at the branch level — fewer turnaways, better staff training, smoother processes for people without standard ID — the regulator has made clear it’s watching.

Aladhal’s message wasn’t subtle. Banks made commitments. The FCA is holding them to those commitments. And the 0.9 million adults who still don’t have a bank account are, in a very real sense, the scorecard.