UK banks' attitude to poor needs to improve -MP

LONDON, Nov 19 (Reuters) UK banks should stop treating people who open basic accounts as ''second class citizens'', an influential lawmaker said on Sunday, although he said progress had been made in improving banking access for the poor.

As a result, legislation is not needed to force banks to open their doors to poorer people, but those banks not meeting commitments to supply basic accounts should be named and shamed, said Labour MP John McFall, who headed a Parliamentary Treasury Committee inquiry into financial inclusion.

Two years ago the government said banks and government should work together to halve the 2.8 million adults in households without a bank account and prove progress had been made by the end of this year.

McFall's Committee said in a report issued on Sunday that progress had been made and proposed several more measures. It said the lack of access to a bank account can be a significant barrier to employment and enterprise and could result in higher charges for cashing cheques and paying utility bills.

McFall said banks should revise rules for documentation needed to open an account and do more to make their staff less ''risk averse'' for people entering branches for a basic account.

''Treating bank account holders like second class citizens by denying access to branch counters causes exclusion and reduces the opportunities for holders to become further integrated with the financial services sector,'' he said.

He also said plans to replace a Post Office Card Account (POCA) with a new product by 2010 had not been handled well by the Department for Work and Pensions (DWP).

Around 1.2 million people who do not have access to another account use a POCA to receive benefit and the DWP needs to ensure plans for a successor product were in place well before 2010, McFall said.

Banks have provided 180 million pounds (9.6 million) to fund POCAs over five years, but the funding ends in 2008.

The British Bankers' Association (BBA) said on Thursday over 2 million basic bank accounts had been opened since April 2003, including a net 1.1 million accounts by people who were previously unbanked. Including accounts with other similar characteristics, there are 6.6 million accounts with basic functionality.

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