Basic bank account lifeline extended to bankrupts

Insolvency trade body R3 welcomes the news that undischarged bankrupts should find it easier to access a high street bank account – currently there is only one mainstream provider offering them. This move comes as research by R3 reveals 79% of the British population agreed that undischarged bankrupts should have access to a basic bank account.

Today Business Minister Jo Swinson agreed legislative changes to the Insolvency Act 1986, which will restrict the circumstances in which a trustee in a bankruptcy can make a claim against a bank.

R3 President Lee Manning commented:

“This is a positive move, and recognises that there is life after bankruptcy. Quite simply bank accounts are a necessity not a luxury – imagine trying to run your life without one. In the past undischarged bankrupts would have found it impossible to pay in wages or pay out bills easily.

“Furthermore, making this change through law rather than by a voluntary code or guidance ensures that the insolvency practitioner’s statutory duties remain clear, and there will be no conflict with their duty to recover funds for creditors. Currently, the banks are worried that a trustee in bankruptcy could claim compensation from the banks where funds have passed through a bankrupt’s account. This perceived risk has put off banks from offering even a basic account to undischarged bankrupts.

“We hope this solution will ensure the banks now offer this lifeline to undischarged bankrupts simply trying to get their finances back on track.”

Submitted by R3