The Treasury Select Committee has forced one of the major high street banks to partially rethink its policy of restricting access to cash machines for vulnerable basic bank account customers.
In response to pressure from Andrew Tyrie, chairman of the Committee, Lloyds TSB has decided to extend cash machine access for its basic account customers – people who do not normally qualify for standard bank accounts – to all machines in the Lloyds Banking Group.
It is not the universal access that Mr Tyrie demanded but it does mean that from early next year the customers will be able to use Halifax and Bank of Scotland machines, giving them a network of 6,600 ATMs to withdraw cash from. The move reverses the cost-cutting decision made in 2006 to restrict access to Lloyds TSB machines only.
Meanwhile, a decision in September to restrict new Bank of Scotland customers to only using machines from Halifax and BOS will also be reversed and they will also get access to all Lloyds Banking Group ATMs from early next year.
Yesterday Mr Tyrie made public a series of letters between himself and bosses at Lloyds and Royal Bank of Scotland, the other major bank which restricts access to cash machines to basic account customers.
In the letters, Mr Tyrie expressed concerns that vulnerable customers of the two banks are being penalised by being prevented from using the majority of the UK's free cash machine network.
Mr Tyrie said: "I understand the need to reduce costs, particularly at this difficult time. However, the decision to restrict access to cash machines has major implications for universal banking services and appears to target those vulnerable consumers who are most at risk of financial exclusion."
He asked the banks to give the issue "further consideration". Lloyds has responded positively but RBS said it was standing by its decision to withdraw the use of non-RBS machines to its basic customers.
In a response to the Treasury Seelect Committee, RBS head of retail Brian Hartzer explained: "We are running our basic accounts at a loss to the bank which we need to reduce. To continue to offer this service we have to make sure it is financially sustainable."