Citizens Advice Bureau: The Unfair Treatment of Bankrupts by Banks

John Tribe could give you a drawn-out lecture on the barbarous and inhumane treatment of debtors over the course of mankind’s history. However, what makes it particularly prolix is the fact that the lecture will discuss incidents that occurred yesterday and may be this morning too. Debtors are still viewed across the globe as some kind of white-collar or blue-collar (depending on the person’s social status) criminals that ought to be chastised or made to feel as uncomfortable as possible. In some countries where there are no established or recognised or popular insolvency procedures the debtor – creditor relationship is akin to that of fugitive – police fugitive task force. Nonetheless, a report of the Citizens Advice Bureau (Call to Account) published yesterday shows that even in societies where there have been substantial reviews of the insolvency laws and practices and the enactment of so-called ‘debtor-friendly’ statutes, the honest and unfortunate trader that is unable to pay his debts due to unforeseen circumstances and the consumer who became insolvent due to “unplanned changes” (job loss, divorce etc) are still very much chastised. Only two (Barclays and The Co-operative Bank) of the seventeen banks that provide basic bank accounts in England and Wales and Northern Ireland allow people going through bankruptcy to open accounts (even with no credit). The evidence adduced shows the anguish of undischarged bankrupts with no access to even basic bank accounts: “basic tasks such as receiving wages or benefits and paying bills can become huge and costly obstacles to overcome, particularly for people who are often at a vulnerable point in their lives.”

The 15 banks that do not provide basic bank accounts to undischarged bankrupts intimate that they are concerned about potential liability although Barclays and The Co-operative Bank told the Citizens Advice Bureau that they experience no such difficulties. The alternative options for these unfortunate (for at least 44 percent of cases) persons include Post Office Card Accounts and Credit Union Current Accounts. Although they are widely available and can be accessed via counter services nationwide (for Post Office Card Accounts) tax credit and pensions payments and other deposits (wages, housing benefits etc) cannot be made, and electronic facilities for payment or withdrawal are not available. The Citizens Advice Bureau (as well as the Treasury Select Committee) is therefore calling on the 15 banks who continue to exclude bankrupts to change their policies as a matter of urgency.

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