One million Brits who currently do not have access to a bank account, will be able to open a basic current account under plans unveiled by Alistair Darling.
In his Budget announcement yesterday, the chancellor revealed that one million current accounts will be created in the next five years, guaranteeing all adults in the UK the right to basic financial services.
Commenting, Peter Gerrard of Moneyextra.com believes it is 'imperative' that the Government provides help to those who are currently excluded from opening a basic bank account.
However, although the move has been welcomed, one financial expert is predicting that this could be the beginning of the end of free banking.
Michelle Slade, spokesperson for Moneyfacts.co.uk, acknowledges that Mr Darling's pledge will give some less well off customers "a fairer deal" but warns that the banks will face higher costs, with the "cost recovered through standard banking customers".
"The change could be another nail in the coffin for free banking, with banks looking to regain the additional cost potentially through the introduction of monthly fees," she said.
Meanwhile, Brian Brown, head of research at Defaqto, has welcomed the chancellor's desire to expand financial inclusion, but suggests that the Government needs to do more as basic bank accounts are already offered by 19 banks and building societies.
"The real issue is to get this type of account more overtly marketed and visible to prospective customers. There are also the issues of proof of identity and residence which can prove to be a barrier for certain consumers," he said.
Supporting Mr Brown's call for the Government to do more, Martin Shaw, chief executive of the Association of Financial Mutuals (AFM), believes the lack of financial understanding amongst many Brits needs addressing.
"What we want to see more of is actual educational initiatives for children and adults which link into the need for people to start taking greater responsibility for their own finances," he said.
© Fair Investment Company Ltd
