Bank accounts
This factsheet is an introduction to bank accounts.
This information is relevant to England.
What is a bank account?
Why have a bank account?
Can I open a bank account?
Can I have a joint account with someone else?
What proof of identity do I need to open a bank account?
What happens if I don't have the right proof of identity to open a bank account?
What happens if my signature is always different?
Can people who receive direct payments get any help opening a bank account?
When is a Power of Attorney a suitable option?
What if the bank refuses to open an account?
Is the law likely to change in the future?
What is a bank account?
Banks are secure places which can be used to look after your money. A record of your money is kept in an account and you will receive a statement or pass book showing details of how much money you have paid in and taken out. Bank accounts come in various forms. The two main types of bank accounts are:
Current accounts (including basic bank accounts)
Savings accounts
Basic bank account
The majority of banks offer a basic bank account. This is designed to be easy to use and understand. It does not cost anything to open. This type of account allows you to:
pay money in and take money out using a cash card
set up standing orders at most banks, and direct debits.
avoid the risk of running up debts by offering no overdraft facility.
Current account
This is the most common type of bank account. It is similar to a basic bank account. However it can also include features such as:
a cheque book (you may need to be over a certain age)
a debit card (which allows you to buy things in shops and pay for them with your
bank card)
the opportunity to arrange an overdraft with your bank.
Both accounts can give you a regular bank statement, which shows you how much money you have paid in or taken out. Some current accounts will pay you a small amount of interest.
However, they are not usually an ideal account for saving.
Savings account
This account is designed to help you save up for things. It pays you interest on the amount you have saved. A savings account usually does not give you:
a cheque book
a debit card, and
a way to pay your bills from it.
There are different types of savings accounts, which depend on whether you want to save a set amount of money or how often you want to take it out. With most types of savings account the rate of interest paid to you might sometimes go up or down.
Some accounts, especially those paying the highest rates of interest may require you to give notice before you can take money out. The simplest savings accounts allow you to draw money out when you need it.
Why have a bank account?
There are many reasons to have a bank account. They include:
it can be easier and cheaper to pay bills
most employers will only pay you by putting money directly into your bank account
it is safer than keeping lots of cash in your house or in your wallet
it can sometimes provide a straightforward way to receive benefits.
Can I open a bank account?
Anyone can apply to open a bank account. A bank is a commercial business and is not obliged to open an account for anyone. However, under the Disability Discrimination Act, a bank cannot refuse to open an account just because a person has a disability. That means people with a learning disability have the same rights as everyone else to open a bank account.
The law states that to have a bank account a person must have contractual capacity. That means they must be able to understand the nature of the contract they are entering into and what might happen if that contract is not followed. They must also be able to give their informed
consent to any transactions or to give permission for someone else to act on their behalf.
If a person does not have contractual capacity the bank can refuse to open an account for them.
This would not be against the Disability Discrimination Act.
Under the Disability Discrimination Act, a bank has to make reasonable adjustments for someone with a disability. This might mean producing statements and other documents in an accessible format, for example by using large, clear print and plain English, together with colour coding and symbols.
Can I have a joint account with someone else?
A joint bank account is an account which is opened in the names of more than one person.
Sometimes a bank might offer a joint account to a person with a learning disability. For this type
of account there needs to be a second person, such as a relative or advocate to sign. It is important to check who is liable for the operation of the account when it is opened. If the second person is held liable for the account this would mean they would have to pay back any money that the other account holder would/could not pay. That is why it is not good practice for professionals to share an account with the people they support.
What proof of identity do I need to open a bank account?
By law a bank has to confirm identity and address before they can open a bank account. This is to stop money laundering. Official documents are the best way to prove identity because they are difficult to fake. Proving identity is usually done using documents like a:
passport
driving licence
household bill
If you do not have the proof of identity or address the bank asks for, you can ask them what other types of identification documents they accept.
What happens if I don't have the right proof of identity to open a bank account?
Some people may not have any of the documents normally required. This does not mean that accounts should be refused. Here are some other forms of identification that might be accepted:
a letter or other official documentation with the person's name and address
a letter from a social worker or another official dealing with the person to confirm
their identity
a letter from a well-known organisation, like Mencap, that currently works with the
person.
The Financial Services Authority has guidance about 'financially disadvantaged people'. This is people who have difficulties obtaining banking facilities because they cannot provide accepted documentation to prove their identity. This includes some people with a learning disability. It is often helpful to talk to the bank manager or head office who may have more of a grasp about the rules and should know what exception procedures are in place.1
What happens if my signature is always different?
A wide range of disabilities can make it difficult for some people to physically sign documents.
This can mean producing a consistent signature on cheques and other bank literature is very difficult. It is not necessary to be able to write your signature in full. A mark is acceptable to a bank as long as it is consistent for checking purposes. Here are some suggestions that might help:
Use a thick pen or felt tip pen to make writing easier
If gripping is difficult, adapted pens and pen grips are available.
If a tremor is a problem, try a weighted cuff to help dampen down the tremor.
Try a clipboard or non-slip mat to prevent the paper from slipping
Use a plastic template if you have problems keeping your signature in the correct
place
If there are a number of items to sign, you could take a break in between signing
them.
Get advice from an occupational therapist. They can be contacted directly or a
referral can be made via a GP or other health professional.2
It is also possible to give someone else the authority to sign on behalf of a person with a learning disability, provided that person understands the authority they are giving.
Using cheques if you have difficulty signing your name If it is hard for a person to sign a cheque consistently they could:
Talk to the bank. The bank may suggest another solution.
Use a facsimile signature stamp, also known as a "rubber stamp". These can be
bought from stationers. English Law recognises this stamp as a valid signature.
Can people who receive direct payments get any help opening a bank account?
The British Bankers' Association, the Department of Health and the Association of Directors of Social Services have jointly signed up to a standard letter. This is to help people who receive direct payments to open bank accounts. This letter acts as proof of capacity and/or address for a bank. There is more information about this on the Department of Health website and the British Bankers' Association website.
When is a Power of Attorney a suitable option?
A Power of Attorney allows a person to choose someone to manage his or her financial and property affairs. This might be for many reasons including the person being physically incapable of managing their financial affairs due to illness.
Sometimes the parents of a person with a severe learning disability want to open a bank account on behalf of their adult son/daughter. Bank staff and even solicitors often recommend Power of Attorney as a way forward. However this may not be suitable. For a Power of Attorney to be used the person must have the capacity to understand the nature of the agreement they are entering into. It is not an option for someone who does not have the mental capacity to understand.
The British Bankers' Association has produced a leaflet with advice for people who need to manage someone else's account. This is called 'Banking for People Who Lack Capacity to Make Decisions' and is available on the British Bankers' Association website at www.bba.org.uk.
What if the bank refuses to open an account?
If you have a problem with a bank that you have been unable to solve with a manager, you should ask for a complaints leaflet so that you can contact their head office. If you still have a problem, you can contact the independent Financial Ombudsman Service. They will be able to advise you on what to do next because they sort out financial problems people have with companies that provide financial services, including banks.
Is the law likely to change in the future?
The Mental Capacity Act 2005 came into force in October 2007. It provides a legal framework which allows people to act and make decisions on behalf of individuals who lack the mental capacity to make particular decisions for themselves.
Key terms:
1. Mental capacity - the ability to make an informed decision based on understanding the situation and the consequences.
2. Contractual capacity - ability to understand what a contract is and the rights and obligations that it gives.
3. Power of Attorney - a legal document that allows someone to choose a person to have control over their financial and property affairs for reasons of convenience. They must have mental capacity at the time they appoint someone. It is possible to have more than one attorney.
4. Joint bank account - an account which is opened in the names of more than one person.
5. Direct payments - money given to a person by social services to pay for the care services that they need. This is instead of receiving social services support.
6. Advocate - a person who speaks up for someone else.
7. Money laundering - the methods criminals use to hide and disguise the money they make from their crimes.
8. GP - general practitioner
9. Direct debit - a way of paying your bills directly from your bank account. You must sign a form that allows the company you are paying to take the money straight from your bank account on a specific date which you have agreed with them.
10. Debit card - a card that is given to you by your bank which allows you to take out money from a cash machine or pay for things directly using your card. The money is taken out of your account straight away.
11. Standing order - this is another way to pay bills directly from your bank account. You sign a form from the company you are paying which says how much you will pay and the dates you will pay. You then give this form to your bank and the money is paid automatically to the company you are paying on the dates you have arranged with them.
References:
1. BBA Enterprises 2000 (http://www.bba.org.uk) 2. BBA Enterprises 2000 (http://www.bba.org.uk)
This document was approved by the British Bankers Association on 02/11/2012 www.mencap.org.uk
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