Cooperative Bank: A Basic Failure

The Cooperative Bank has today announced it is discontinuing its ‘basic current account’ for persons who are ‘undischarged bankrupt’, a vital account that allows individuals to have a bank account allowing their wages to be paid without cost.

Announcing the decision, the Cooperative Bank’s Managing Director for Retail Banking John Hughes amazingly sought to pin the blame for its decision on the UK’s other main retail banks saying “Across the industry there has long been an unlevel 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 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.”

Following the withdrawal of this service, it is now the case that persons undischarged bankrupt seeking a free banking service is to join Barclays as the only remaining basic account on offer, the continued availability of which must surely now be in doubt.

The response to the withdrawal has been surprisingly muted as the Cooperative Bank’s call to cast itself as the victim seems to have been heeded. It is true that in terms of the company’s balance sheet the provision of these accounts is not profitable. Understandably then they have sought to limit their exposure. But to completely withdraw from the service is plainly inconsistent with their call to be concerned about the financial well-being of those individuals most at risk from predatory lenders – an account is not just vital to manage money but to secure employment as well.

Jo Swinson, the Liberal Democrat MP and Consumer Minister, is missing the point when she says in response to the Cooperative Bank’s decision that it is up to banks to look at the provisions available to those undischarged bankrupt. We have seen time and again that the nation’s major financial institutions are focussed solely on profit, irrespective of the detriment to society. To ask them to act as public servants and look to the common good is akin to asking Count Dracula to coach a teenage girl’s volleyball squad. If Ms Swinson is genuinely keen to ensure that persons undischarged bankrupt have the opportunity to put their lives back in order on a sound financial footing, it is incumbent on her and her government to either introduce legislation compelling all retail banks operating on the High Street to offer these accounts or for the government itself to provide them.

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This post was written by Casper Denck