Over 1 million people don't have a current account, new figures show

Here, Yahoo News takes a look at why 1.1 million adults in the UK don't have a basic current account.

British pound banknotes
The Financial Conduct Authority says cash remains a 'vital payment method for many, including the most vulnerable in society'. (Getty)

While Nigel Farage has had plenty of press attention over the closure of his account at private bank Coutts — it appears around one million adults in the UK don't have access to a basic current account.

The former UKIP and Brexit Party leader's banking problems have been well documented in recent weeks, with Farage saying on Monday that the Natwest-owned Coutts has offered to reinstate his account after it admitted it was closed partly due to his political views.

According to new figures from the Financial Conduct Authority (FCA), there are around 1.1 million adults in the UK currently living their lives "unbanked".

The regulator's newly released Financial Lives 2022 report says this figure makes up 2.1% of the country's adult population.

That is down from 1.3 million (2.5%) in 2017 – a fairly modest decrease considering an increasing number of businesses in the UK, including pubs and shops, have been going cashless.

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Former Ukip leader Nigel Farage in his local village near Westerham, Kent, following the resignation of NatWest chief executive Dame Alison Rose after she admitted to being the source of an inaccurate story about Mr Farage's finances. Picture date: Wednesday July 26, 2023. (Photo by Gareth Fuller/PA Images via Getty Images)
The issue of being unbanked goes far deeper than Nigel Farage. (Getty Images)

Despite this shift towards a cashless society, the FCA says that cash remains a "vital payment method for many, including the most vulnerable in society".

It says that in May 2022, 3.1 million adults (6%) said they paid for everything or most things in cash in the previous 12 months.

Over half (52%) of these people found it more difficult to either withdraw or deposit cash in the two years to May 2022 due to the closure or reduced opening hours of their local branch, Post Office or cashpoint.

The FCA also found that as of May last year, 3.9 million adults (7%) were digitally excluded – 26% of whom were aged 75-84, and 2% of whom were 85 and older.

Who is most likely to be unbanked?

The groups most likely to be unbanked, according to the FCA's findings, are Muslims (10%), the unemployed (7%) and those who were long-term sick, temporarily sick, looking after the home, or carers (7%).

Proportion of UK adults who are 'unbanked'. (FCA)
Proportion of UK adults who are 'unbanked'. (FCA)

Others among the most vulnerable groups are those with no educational qualifications (7%) and those who have learning difficulties (6%).

It could also depend on where you live, with a higher proportion of unbanked adults in Southern Scotland (6%), Outer London – West and North West (5%), Greater Manchester (4%), and the West Midlands (4%).

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There is also a strong link to deprivation, as 3.6% of adults in the most deprived areas of the UK are unbanked, compared with less than 0.6% in the least deprived areas.

According to the Resolution Foundation think-tank, there is a strong correlation with income, with 327,000 unbanked people in the lowest household income decile, compared to 33,000 in the highest.

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Why do people not have current accounts?

The FCA's report shows that 53% of unbanked people – defined as not having a current account – don't want one, which could be for a number of reasons.

They may not trust the financial system, they may have got into trouble with an overdraft in the past or they simply may not think they need one.

However, 22% said they would have liked to have a current account, and a further 27% said they weren't sure if they wanted one or not.

Some people don't have an account because they are unable to manage their own finances due to having learning difficulties or disabilities.

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Around 10% of Muslim adults in the UK are unbanked, the FCA's data shows. (FCA)

Another potential barrier is not having the required documentation to open account, and while this is a small proportion, the FCA says these people are more likely to be "women, adults who are not working, adults from a minority ethnic background, and adults with one or more characteristics of vulnerability".

Out of all the unbanked adults in the study, when asked if they'd ever tried unsuccessfully to open a current account, 16% (0.2m) said that they had.

That's up from 9% in 2020, and the FCA's findings suggest fewer adults are aware that everyone in the UK has the legal right to a basic current account (not including an overdraft) from nine of the largest providers - down from 40% in 2017 to 27% in 2022.

What challenges can unbanked people face?

Having a basic current account can help people access accommodation, benefits and employment, according to trade association UK Finance.

It says having access to these three things is essential to prevent reoffending rates among recently released prisoners.

Not having a bank account can make it difficult to access many financial products, and can make paying bills significantly harder, with financial benefits often offered to those who set up a direct debit.

With shops, pubs and restaurants increasingly becoming cash-free, those without current accounts may find themselves being excluded from businesses.