Survey reveals banking barriers

IMPROVED access to financial services could help people on low incomes to avoid the poverty trap.

This is one of the main findings of a study by the Combat Poverty Agency into financial exclusion.

Combat Poverty director Helen Johnston said yesterday: “Access to basic financial facilities such as direct debits, electronic transfers, savings accounts or credit can help people to manage household resources more effectively, plan better for their future and protect themselves against poverty.”

The study found without such facilities the cost of managing the household is higher, people are more vulnerable to theft and have little protection against unexpected expenditure or loss of income.

Ms Johnston said people are facing difficulties in securing employment as they do not have bank account details to give employers.

The study revealed the barriers people encounter when dealing with financial institutions include ID requirements, a lack of appropriate financial products and limited availability of services from community and State bodies.

“People on low incomes may also exclude themselves from the banking system. In some cases, this is because they lack the confidence to engage with banks or feel that banks are not interested in poor people. In others it is because they feel that a bank account is unnecessary for managing a low income,” said Ms Johnston.

The report highlighted the role of credit unions and post offices as they provide access to savings and affordable credit facilities within disadvantaged communities.

The study was conducted by Combat Poverty Agency following an approach by the Financial Regulator.

The regulator’s consumer director Mary O’Dea said: “One of our strategic goals is to foster access to financial services. We will consider the policy implications in the report carefully in the context of our role.”

The Irish Banking Federation said it welcomes all initiatives which generate discussion on potential strategies to increase financial inclusion.