Lloyds not meeting no-frills guidelines for UK customers

Lloyds banking Group has failed to meet “fee-free” guidelines for the majority of its basic account holders, according to Treasury figures.

In 2014, Britain’s nine biggest banks agreed on new rules designed to widen access to banking and prevent vulnerable customers from incurring large fees.

It is the first time Britain’s finance ministry has conducted an official study into the banks’ provision of these basic bank accounts since the guidelines came into force on 1 January 2016.

The state-backed lender is the largest provider of basic bank accounts, with nearly four million customers. However, fewer than a tenth of those accounts are fee-free.

The Lloyds banking group as a whole, which includes Halifax, Bank of Scotland and Lloyds bank, provide nearly eight million basic bank accounts with fewer than 250,000 meeting the guidelines.

Only the basic accounts opened from the start of the year seem to be following the guidelines with all new accounts incurring no fees, according to Treasury data.

For the first half of this year the data showed that nearly half a million new basic bank accounts were opened in Britain, with Lloyds opening the most.

Lloyds said: "We welcome (the) data which shows that Lloyds Banking Group is opening 36% of the new basic bank accounts, demonstrating our commitment to support banking for all."

Seven of the nine banks said all their basic accounts are fee-free and consistent with the terms of the agreement.

The basic accounts are available to customers who do not have a bank account or are ineligible for a standard current account, which for most banks is a loss-making business.

Lloyds share price fell 0.53% at the close on Monday.