Template for fee-free basic bank accounts agreed with nine major UK banks.
The Treasury has hammered out a landmark deal with major UK banks to offer standard fee-free basic bank accounts.
Nine high street banks, which account for 90% of the UK current account market, have signed up to the deal.
Basic bank accounts
In the UK there are an estimated nine million users of basic bank accounts.
Basic bank accounts are designed for people on low incomes or with a poor /non-existent credit history who aren’t able to get access to a standard current account.
These accounts are no frills. None offer an overdraft facility or come with other perks like cashback or in-credit interest.
Instead, they offer simpler functions like being able to pay bills by direct debit and having a salary or wages paid in.
However, not every bank offers them and even if they do they can be restrictive and expensive.
Some only offer cash cards rather than debit cards, which can only be used at cashpoints and can’t be used to make purchases in-store or online.
And some charge fees as high as £30 or more for things like bounced payments or making too many withdrawals in a month, which can escalate if they remain unpaid.
Read: How to find a basic bank account.
The new deal
Under the new deal, fees charged on these accounts will be scrapped.
Account holders will also be offered a debit card as standard, in order to withdraw cash from the UK's ATM network and make purchases.
Earlier this year the EU agreed a directive that stated all residents should be given the opportunity to open a basic bank account, with fees that were fair, and allowing people the opportunity to switch providers.
The British Bankers Association (BBA), which worked with the banks to develop the new template, think the new acocunts will have a positive impact.
BBA chief executive Anthony Browne said: "These basic accounts will make it easier for more people to manage their money. They will have many features that will help people to budget, pay bills and save up."
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