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Lloyds Banking Group fails to meet ‘fee-free’ basic account guidelines

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Lloyds Banking Group is failing to meet “fee-free” guidelines for millions of its basic bank accounts, which are typically held by people on low incomes.

Data published by the Treasury showed more than 3.6 million of the group’s customers were at risk of running up bank charges because their accounts did not conform to a voluntary agreement reached between the government and the major high street banks in 2014. The agreement was designed to widen access to high street banks and help vulnerable customers.

Labour MP John Mann, a member of the Treasury select committee, said the Lloyds group, in which the taxpayer still has a near-8% stake, was guilty of unacceptable behaviour.

It is understood one of the accounts affected is the Halifax Easycash account, where a customer can be hit with up to three £10 “returned item fees”a day in cases in which there is not enough money in the account to make a payment but and the bank refuses to allow them to go into the red.

Basic bank accounts are aimed at those who do not have a bank account or are ineligible for a standard current account. But the Treasury said that in the past, some banks sought to cut the costs of providing these by charging fees when direct debits or standing orders bounced. These charges were in some cases “very high”, and some people were effectively “unbanked” after ending up saddled with significant overdrafts that left them unable to use their accounts , the Treasury added.

In December 2014 the government reached a voluntary agreement with nine banking groups – including all the major high street names – which required them to offer fee-free banking from 1 January this year.

The Treasury said there were now just under 8m basic bank accounts open in the UK, of which more than 4.1m met the 2014 agreement standards. However, that leaves more than 3.7m where customers are still not benefiting from completely fee-free banking. The vast majority of these are operated by the Lloyds group, which includes the Halifax and Bank of Scotland brands.


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