If you can’t tell a financial institution your address, the shutters will probably come down faster than you can say “financial exclusion”.
Most banks won’t let you open a bank account, but without a bank account you then can’t get a job and earn any money or access benefits that are available to you.
It’s a cruel catch-22 situation whereby the rules around opening a bank account are penalising homeless people and keeping them in the situation they find themselves in. Seven in 10 Citizens Advice officers said homeless clients always or frequently experience difficulty opening a bank account because they don’t have a fixed address.
This isn’t just a problem affecting a small minority group either. The latest government figures show that between January and March this year, there was a 7 per cent rise in the number of homeless households in England, or those at risk of homelessness, to 68,250.
However, organisations including Shelter predict that the real number of homeless people is much higher. This is because of what’s called the “hidden homeless” – individuals who are not recorded by official statistics because they are sofa surfing or hidden from sight when the official count is made. It estimates that more than 253,000 people in England are homeless and living in temporary accommodation, the highest level in 14 years.
There are many reasons why someone may become homeless, including those escaping domestic violence, but one thing these people have in common is not having a fixed address. This can be a problem for a huge range of reasons, including receiving important mail and opening a bank account.
While every bank is supposed to let someone open a current account, in reality many won’t do this unless they see proof of a fixed address and a valid form of ID. But most homeless people don’t have these documents and are therefore excluded from having a bank account.
There have been some changes in recent years, including with some of the biggest names on the high street. HSBC launched its “No Fixed Address” service in December 2019 and since then it has opened 1,000 accounts for homeless people. It provides people with a basic bank account without them having to show ID or proof of their address.
To access this service someone must be experiencing housing or homelessness difficulties, and be receiving support from one of the bank’s partner charities (of which there are around 100 including Shelter and Stonewall). They will then need a referral form from the charity in question before they can open a bank account.
Jo Cutler, Shelter’s Merseyside hub manager, said: “As this pandemic has shown, home is everything. Yet our housing emergency means thousands of people across the country don’t have one – and sometimes this means they are left sleeping on the street.
“Surviving without somewhere warm, clean or safe to call home is hard enough – not having a bank account to do vital things like access benefits or get your wages paid makes it even harder.”
Lloyds Bank has a similar scheme, which started at its Market Street branch in Manchester in 2018. Across all Lloyds, Halifax, and Bank of Scotland branches it is now possible to open a basic bank account if you don’t have a fixed address. Instead, a letter of introduction provided by temporary accommodation, such as a refuge, hostel, or charity can be accepted as either proof of address or identity.
Newer banks, including Monzo, also offer basic current accounts without proof of a fixed address.
They will usually ask for proof of ID but will typically allow someone to open an account with a temporary address, such as a friend or family member’s house, or an address of a homeless shelter or refuge.
While the move by HSBC and Lloyds is a positive one, it’s not clear why all the big banks and the Post Office network aren’t implementing the same process. A cynic might say that it won’t happen until they are required to by law or they find a way to profit from it.
The achievement of 1,000 homeless people helped by HSBC can’t be faulted, but it’s inconsequential when compared to the hundreds of thousands of homeless people in the UK.
Citizens Advice calls it the postal paradox which keeps homeless people homeless. The organisation has suggested that a service should be set up by Royal Mail, allowing homeless people to have mail sent to their chosen post office. They can then use this as a fixed address for reasons such as opening a bank account and accessing benefits.
Matt Downie, director of policy and external affairs at Crisis, said: “We know that without a bank account it can be almost impossible for people experiencing homelessness to access employment, apply for benefits or crucially find somewhere to live which leaves many people stuck in a cycle of homelessness that can be difficult to escape from.
“Although all high street banks are legally required to provide accounts for everyone, their requests for proof of identification or an address can make it extremely challenging for people who are homeless.
“We know that some banks like HSBC and Lloyds are working hard to improve access to bank accounts, but we need all banks to follow suit, and with more urgency so that people aren’t financially excluded and at greater risk of homelessness.”