Scrap ATM limits, banks told


Two banks partly owned by the state have been urged by MPs to drop restrictions on customers with basic bank accounts using cash machines run by other banks or third parties.

The Commons Treasury Committee said the rules imposed by RBS and Lloyds TSB, both of which needed a taxpayer bailout following the 2008 banking crisis, risked compromising the cash machine network.

The MPs said the impact of the rules could hit the poorest hardest, for potentially only a small financial gain for the banks.

Barclays, HSBC and Santander - which is due to take over RBS branches in England and Wales following the 2008 bailout - were praised by the committee for providing basic bank account holders with unrestricted access to cash machines operated by third parties.

Tory MP Andrew Tyrie, who chairs the committee, said: "Restricting access to cash machines could compromise the network.

"In certain areas, more than a third of ATMs could be placed at risk if other providers of basic bank accounts were to take similar action or to remove themselves from the LINK system.

"The Committee understands the need for banks to control costs, particularly in these difficult times.

"In this instance, the financial benefits to Lloyds and RBS appear relatively small but those affected would be amongst the most vulnerable people in society."

Mr Tyrie said he acknowledged in the longer term both the services offered to banking customers and the charges they paid would need to be reformed.

The Treasury Committee is to write to other bank account providers to confirm their stance on allowing customers to use cash machines operated by other banks or third parties.

Basic bank accounts are available to those who may not meet banks' minimum criteria to open a personal current account owing to a poor credit score or no credit history.

They often do not offer any overdraft and sometimes do not have a debit card, but can be used to receive direct payments and to set up standing orders and direct debits.

A total of 16 banks operating in the UK offer a basic bank account product.

RBS, and its sister bank NatWest, phased in the restrictions on basic bank accounts in November 2011.

Lloyds TSB has applied similar rules on basic bank accounts opened since September 2011.

A Lloyds TSB spokeswoman said: "Lloyds TSB basic bank account customers are able to withdraw money from all Lloyds Banking Group cashpoints including Halifax and Bank of Scotland machines. This gives them access to over 6,500 cashpoints.

"In addition, customers can also use over 12,000 Post Offices nationwide, which means that almost all of our basic bank customers are able to access their money within one mile of where they are based.

"Our customers benefit from a free banking service, with many of the functionalities of a normal bank account - for example, the ability to set up standing orders and direct debits.

"It also provides access to internet, phone and mobile banking, including text alerts to help customers manage their money.

"The fact that we opened over 100,000 new basic bank accounts last year shows that customers really value the range of services that we provide.

"We remain fully committed to providing a range of basic bank accounts to suit our different customer needs."

A Which? spokesman said: "When people are struggling to cope with their household bills it's right that the Government are putting pressure on those banks who are penalising some of their most financially vulnerable customers.

"We'd urge consumers to vote with their feet by switching to a bank that doesn't impose unfair charges on its customers."