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Banks and other account providers are being urged by the regulator to increase awareness of “no frills” accounts.

Basic bank accounts allow people to make and receive payments but without the availability of an overdraft – and some providers could make it easier to apply for one – according to the Financial Conduct Authority (FCA). The FCA wants the banks to do more for those who want, but don't possess a bank account.

The watchdog said banks, building societies and payment companies are trying to help customers gain access to these accounts. It suggested these companies use existing good practice models like teaming up with homelessness charities to address the needs of vulnerable clients.

The regulator says people involved in the adult entertainment business have reported difficulties getting hold of these accounts. It said account denials or terminations could lead to significant harm for people running those businesses, particularly if they then have to rely on cash or personal bank accounts for their work, with the latter revealing their name to their clients and potentially exposing them to blackmail.

As at 30 June 2023, figures show 7,363,018 basic bank accounts were open across nine providers. Estimates suggest that around spring 2022, 1.1 million UK adults were without a payment account or completely "unbanked".

Being "unbanked" can pose significant challenges for individuals in managing their finances, especially as society shifts away from cash transactions. The FCA has urged banks to reassess their policies on account refusals and closures, with a focus on preventing detriment to vulnerable customers.

Banks are also being reminded to accommodate those who cannot provide standard ID documents, and to be transparent about acceptable alternatives. Consumer advocates and charities have brought attention to the difficulties faced by vulnerable groups in accessing banking services.

Instances include people with learning disabilities being incorrectly assumed to require a power of attorney, or others being turned away due to lack of conventional identification like a utility bill. The FCA has reiterated to financial institutions the importance of adhering to consumer duty standards, which includes clear and supportive communication with customers when accounts are closed or applications denied.

Sheldon Mills, the executive director of consumers and competition at the FCA, stated: "We want to achieve more consistent outcomes, with people being aware of what accounts there are that might be right for them, more support for the vulnerable and people not being denied access without good reason."

The FCA, on the other hand, declared in 2023 that it had not discovered any proof of account closures due to legally expressed political views. The new report reaffirms that no additional evidence was found to suggest this is happening. Nonetheless, it has requested firm's senior leaders to sign an attestation, taking personal responsibility to ensure rules are abided by, and they feel confident about future adherence.