New rules help bankrupt 
access financial services

Have your say

NEW rules aimed at ending the drought of basic bank accounts for undischarged bankrupts were unveiled by the Government yesterday.

Barclays is the only mainstream lender to offer the service after Co-operative Bank recently stopped offering new accounts to bankrupts. The changes, which affect England and Wales, aim to give banks greater protection and reassurance over the potential for any possible claims which could be brought against them.

Trustees in bankruptcy cases will no longer be able to go after the bank providing a bankrupt’s account for losses of money unless they have specifically told the bank that they have an interest in the cash. As insolvency laws currently stand, a bank can potentially find themselves liable for a claim even if they have had no advance warning of this from a trustee. The Insolvency Service said that such cases are rare – but it is the potential risk which is currently putting banks off offering accounts to undischarged bankrupts.

Announcing the changes, Business Minister Jo Swinson said: “Offering an account will remain a decision for the bank, but I am pleased with the positive response we’ve seen from the sector already and I’m confident the change will offer a new lifeline to vulnerable people who have struggled to access basic financial services.”

The changes follow a consultation by the Insolvency Service, which indicated that about a fifth of bankrupts find themselves unable to get a bank account for the first year of bankruptcy and are forced instead to operate on a cash-only basis or use someone else’s account.