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Bankrupts to get better financial access

Bankrupts to get better financial access

Category: Banking

Updated: 13/12/2012
First Published: 17/11/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

People who have been made bankrupt could soon be given better access to bank accounts.

The Government has asked that it be given evidence about the effect bankruptcy has on people's ability to open a bank account and wants to know how the current situation can be improved.

Currently, there are no rules that prevent people who have been declared bankrupt from holding a bank account.

However, in very limited circumstances, people can pursue a bank for loss of money following being made bankrupt, meaning most banks will not even offer a basic account to people who have not been discharged from bankruptcy.

It means that many people have to operate in cash during their bankruptcy and will struggle with such basic tasks as receiving wages and paying bills.

The Government says that the current situation can hinder people's financial rehabilitation.

"Access to a bank account is an essential stepping stone to help people manage their finances and to get them back on track after facing up to their financial difficulties," Business Minister Edward Davey said.

"Without access to a bank account, even the simplest financial transaction is beyond reach for an undischarged bankrupt. What I want to see are financially capable consumers who are able to effectively manage their money, and make the fresh start they need.

"If evidence suggests that there are some people that are struggling to get a bank account, I want to see what can be done to help improve their circumstances."

The Government says there are a number of possible courses of action including providing bankrupts with details of providers who will offer them accounts.

Other options include drawing up a voluntary code for banks or drafting in legislation that removes or lessens potential liabilities for banks, meaning they would be more inclined to offer accounts for people who have yet to be declared discharged from bankruptcy.

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