Insolvency Service
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Bankrupts to get better financial access

Bankrupts to get better financial access

News Release issued by the COI News Distribution Service on 17 November 2011

The Government would like to see improved access to bank accounts for undischarged bankrupts. Proposals have been published asking for evidence about the effect bankruptcy has on the ability of individuals to access a bank account and inviting views on possible measures to improve access.

Bankruptcy can be a fresh start for people who have got into an unmanageable debt situation but as a consequence it appears it may lead to difficulties getting a bank account, which hinders their financial rehabilitation.

Without access to a bank account, bankrupts may struggle with basic tasks such as receiving wages and paying bills and this can result in additional expenses for them.

Whilst there is no law that specifically prevents a bankrupt from holding a bank account, it is a decision for a bank whether to offer an account. A trustee can, in very limited circumstances, consider pursuing the bank for loss of money from the bank account following a bankruptcy. For this reason, most banks will not offer even a basic account to undischarged bankrupts.

Business Minister Edward Davey said:

“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. 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 purpose of the consultation is to gain information about the number of people affected, which will help inform whether or not formal intervention is needed to improve access to bank accounts for people who are bankrupt. The possible courses of action include:

• Promote providers who currently provide access to bank accounts for undischarged bankrupts – currently two high street banks offer basic bank accounts to undischarged bankrupts.

• Establish a voluntary code for banks – Banks, building societies and other banking service providers already operate under a voluntary code of practice which covers certain products and services and encourages those organisations to provide clear information. The banks could sign up to a code to agree to provide accounts to undischarged bankrupts.

• Providing guidance for trustees in bankruptcy - drafting further detail about the circumstances in which a trustee should consider a claim against a bank and when they are unlikely to, the banks would have a clearer indication of the likely risk of a claim and perhaps be reassured that it would be unlikely

• Introduce legislative change - If non-statutory options seem unlikely to improve the situation, legislation could be amended to reduce or remove any potential liability on a bank.

The consultation seeks to gather evidence on the problem and to explore possible solutions. Interested parties should respond to the consultation on

The consultation will close on 9 Feb 2012.

Notes to Editors

1. The public consultation on Bank Accounts for Bankrupts is set to run for 12 weeks. The consultation seeks to gather evidence and offers a range of possible statutory and non statutory solutions. The consultation, Bank Accounts for Bankrupts can be found here

2. In England and Wales only two high street banks offer undischarged bankrupts access to a current account meaning that some are left without any access to a bank account, which forces them to operate on a cash basis for the duration of their bankruptcy. In July 2010 Citizens Advice published their report ‘Called to Account’ stating that the current situation was causing undischarged bankrupts undue hardship. As a financial inclusion issue, having to operate on a cash basis means that transactions are more expensive and more difficult for this group of people. Savings cannot be made by using direct debits or online prices and there can be transactional difficulties receiving wages and having to make all transactions during office hours.

3. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies and debt relief orders) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from

5. Media enquiries should be directed to:
David Ward – 020 7637 6373


Lorna Dennis
Phone: 020 7637 6279

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