Setting up a bank account

One of the issues faced by many of our residents is that they find it difficult to open a bank account and to get good advice on banking.

This is a problem as many benefits including housing benefit are now usually paid direct into a bank or credit union account.

The Council is committed to helping all our residents have access to basic banking facilities.

We have therefore produced a simple banking information pack for all residents. This is to help you understand the different types of accounts which are available, and the information you will need to provide to open a basic account.

For a physical copy of the basic bank account information pack please contact us.

 

What is a basic bank account?

A basic account is a very simple account that gives you access to basic banking facilities but limits the chances of you getting into debt. These basic accounts allow you to have your benefits and wages paid directly into your account, and to pay your bills by direct debit or standing order. But they do not allow you to have an overdraft or give you a cheque book. You usually are given a cash card to withdraw money from machines, and some banks will give you a debit card. Similar basic budgeting accounts may also be available from credit unions.

For more detailed information telling you all you need to know about these basic accounts please see:

• our guide to basic bank and credit union accounts
• money made clear leaflet on basic bank accounts
• London Community Credit Union Leaflet

Why should you open a bank building society or credit union account?

There are many reasons for opening a bank or building society account:

• having an account makes it easier to manage your money as you have a record of how much you are spending and get regular statements showing where your money is going
• getting your income paid directly into your account , and paying bills from the account by direct debit will save you time. It may also save you money as many companies offer you a discount if you pay by direct debit
• if you don’t have an account then it can cost you money to cash cheques
• direct payments into an account are safer than cash, cheque, and giro payments which are more likely to go missing in the post or be stolen
• many employers insist on paying wages into these types of accounts. Opening an account will make it easier if you start work for an employer who insists on paying you by Bacs payment
• most benefits including housing benefit are now usually paid direct into a bank, building society, or credit union account. If you are paid housing benefit under the Local Housing Allowance Scheme we will usually pay you direct by Bacs payment

Which banks offer basic bank accounts?

Most banks should offer a basic bank account, however each account will be slightly different and offer different features. To help you, we have produced a list of local banks that offer basic bank accounts, and what services they usually offer.

This list is for guidance only and for further information you should contact the bank concerned.

• list of banks in Hackney 
• money made clear list of banks

Problems with providing proof of identity

In law banks, building societies, and credit unions must check the identity of their customers before allowing them to open an account.

Without these checks, criminals and fraudsters could open an account and take out loans in your name by pretending to be you.

There are no standard rules as to what documents will be accepted as proof of identity, as the requirements vary slightly from bank to bank. But most banks will want at least one document to prove your identity, and another one to confirm your address.

These strict requirements will cause problems for some individuals who do not have the necessary proof of identity to open an account. However if you genuinely cannot provide the documents required, in certain circumstances the banks may accept other documents.

For housing benefit customers only

To try and help we have produced a confirmation of identity letter which we can give to you to confirm that we “The London Borough of Hackney” have verified your identity and residency to process your housing benefit claim.

We have an agreement with the London Community Credit Union that where other documents can not be provided this letter will normally be accepted as proof of your identity.

Although we can give this letter to you to help you open an account at other bank or building societies it is up to the individual bank or building society concerned as to whether they accept this.

We cannot guarantee that any bank or building society will agree to accept our letter confirming your identity, and you may still need to provide further documents.

If you need us to help verify your identity please contact us.

• sample proof of identity letter

History of debt / bankruptcy

Many individuals find it difficult to open a basic bank account because they are bankrupt or have a history of bad debts.

However not all banks or building societies decline applications from those who have been bankrupt. You should speak to the bank or building society where you want to open an account for more information before submitting an application.

Both the Coop Bank and the London Community Credit Union currently open accounts for individuals with a history of bankruptcy or debt problems, although the final decision about opening an account is up to the organisation concerned.

Payment of housing benefit by Bacs credit

It is our policy to pay housing benefit direct to a bank, building society or credit union accounts by direct credit.

If you would like your housing benefit paid direct into your new account please fully complete and return the below form.

When you return the form to us, you will need to include your latest statement or a letter from your bank, building society or credit union confirming your new account number. Unfortunately we can not make payment to Post Office cash card accounts.

• direct credit form and leaflet

What happens if you are overdrawn?

One of the problems with having a bank account is that if you are overdrawn the banks may take your housing benefit to cover fees and charges.

However if you ask, your banks should not use income related benefits you receive such as housing benefit for this purpose. This is because the law says that you need a minimum amount to live on, and you have the right to ask your bank to use your benefit to make important payments such as your rent, regardless of whether you are overdrawn.

If you receive housing benefit payments straight into your bank account, you can protect these benefit payments and ask your bank not to take them because you are overdrawn or to pay bank charges. You can tell the bank only to pay your housing benefit to your landlord. This is known as the first right of appropriation. For more information about this please read the leaflet below.

• first right of appropriation leaflet

Issues with debt problems

We realise that during the economic downturn it has been difficult and many of our users are struggling to deal with debt.

If you do have problems with debt then both the Citizens Advice Bureau and Hackney Law Centre offer free debt advice for residents. For more information contact them directly.

Hackney Citizen’s Advice Bureau: Free advice on a range of issues including benefits, consumer problems, employment issues, housing problems, legal issues, debt advice, relationship, family and personal problems as well as tax and utility related topics. Tel: 0844 499 1195.

Hackney Law Centre: Free legal advice and representation for those who live or work in Hackney. Free advice surgeries in Housing, Debt, Consumer Law, and Small Claims. Tel: 020 8985 8364.

Do you need general money advice?

Whatever the situation with your finances, it’s good to know where you stand and that you are making the most of what you have. The health check, a new online money planner from the Money Advice Service, is for everyone.

The Money Advice Service is independent and it’s here to help everyone understand and manage their money better.

It takes 10 minutes to answer some straightforward questions and the health check will give you a personalised action plan which identifies the top three things you can do to make the most of your money right now, and to plan for future goals.

Best of all – it’s free and it’s unbiased. The Money Advice Service won’t recommend a particular product or provider or try to sell  you anything.

Over the phone

If you call 0300 500 5000 you can also get personalised advice from unbiased Money Advisers (call rates may vary). And if you do the health check and need some further advice, or do not understand any of the actions it recommends, give them a call. They will be happy to help you.

About the Money Advice Service

The Money Advice Service was set up by government and is funded by a social responsibility levy on the financial services industry.

This service is independent of the London Borough of Hackney, and Hackney are not responsible for the advice offered.