The Co-operative Bank has announced that it will no longer offer its basic bank account to undischarged bankrupts.
The company’s decision to exit the market means that only Barclays Bank will provide undischarged bankrupts with a current account product.
John Hughes, managing director of retail banking at the firm, said: “Across the industry there has long been an un-level playing field in the provision of basic bank accounts, with our bank doing far more than most and we have been calling for some time for this to be better addressed.
“Unfortunately, it has now come to the stage where our disproportionate market share of the basic bank account market has continued to grow significantly and, regretfully, we now need to take steps to address this.”
It was confirmed that the Cashminder current account would close to undischarged bankrupts from today (17 September), but that the bank’s existing customers will not be affected.
Those excluded from opening a basic account are people against whom a bankruptcy order has been made and who have not been discharged from bankruptcy, which usually takes 12 months.
Basic current accounts do not offer an overdraft facility or chequebook.
Hughes claimed that the organisation remained committed to providing products to some of the most financially excluded groups within society and will maintain its “competitive position” in the market.
“If the market changes and measures are introduced to ensure that all account providers, including new entrants, genuinely perform on this issue, we will review our decision,” Hughes added.
A statement from the British Bankers’ Association said: “Banks who accept bankrupt customers open themselves to potential legal challenges from their customers’ creditors, who could have a legal claim to money passing through the account.
“The banks are currently working with the Department of Business, Innovation and Skills on this issue to ensure as many people as possible enjoy access to the banking system.”