Banks 'must do more to push basic accounts'

Basic bank accounts have helped a million struggling people get access to financial services, yet the high street institutions have begun reducing their benefits.

RBS and Lloyds have withdrawn access to the Link ATM network to their basic bank account holders while the Co-op has stopped offering the accounts to bankrupts.

Now watchdog Consumer Focus has called on the government to force banks to produce minimum standards for the crucial accounts. Consumer Focus chief Mike O'Connor said yesterday: "The last thing consumers need is a race to the bottom between banks that keep chipping away at these accounts."

The accounts are crucial as they chip away at the so-called poverty premium, the extra amount vulnerable people are forced to pay for basic services because they can't save money by using direct debits, for instance, or buy cheaper goods on the internet.

The Co-op supported the call. Banking boss John Hughe s said: "If no action is taken, standards for basic banking will continue to deteriorate."

MP Andrew Tyrie, chairman of the Treasury Select Committee, has called on Lloyds and RBS to remove the restrictions they introduced.

"We have yet to receive a response to this recommendation," he said yesterday.

There are currently 8.4 million basic bank accounts, one fifth of the UK's adult population.