RBS cash-point ban for poorest customers

Anyone with a basic RBS account will be restricted to RBS-owned ATMs in a cost-saving measure by the bank, which is 83 per cent owned by the taxpayer.

The new rules were introduced for anyone signing up to a new type of "no frills" bank account, introduced at the beginning of July - but are now to be gradually extended to those with existing basic accounts.

Consumer groups have hit out at the decision - claiming that those on lower incomes would be prohibited from using the vast majority of the UK's ATM network.

The basic bank accounts, which already bar account holders from having an overdraft or using a cheque book, are often used by some of poorer customers as they do not require a credit check to be set up. Such accounts are strongly supported by politicians as part of a plan for financial inclusion for lower- income households.

"This change will increase financial exclusion as it leaves basic bank account holders at RBS unable to access around 80 per cent of the free cash machines in the UK," said Dominic Lindley, principal policy adviser for Which? "These account holders will be inconvenienced and might incur extra costs when travelling to find a cash machine they can use."

Michael Ossei, lending expert at uSwitch.com, added: "This move is going to leave the most vulnerable customers stuck between a rock and a hard place. Unless they are able to qualify for a better account, they will have no option but to use a limited number of cash machines."

Lucy McTernan, chief executive of Citizens Advice Scotland, said a report into the banking industry last year had revealed that one in ten Scots does not have a bank account - despite two-thirds having tried to apply to open one.

"The whole point of basic bank accounts is that they tend to be used by people who are financially vulnerable," she said. "The principle behind them is that they should enable the person to manage their money in a straightforward and practical way. They should therefore be accessible and easy to use."

A spokesman for RBS claimed that it was financially "unsustainable" to continue paying flat charges to other institutions for transactions made by customers who do not pay fees.

"It is unsustainable for us to offer access to other banks' ATMs for basic account holders," he said. "We face a charge for every transaction and we have to re-coup it elsewhere."

He said basic account customers would have access to 8,000 RBS cash machines in the UK, through RBS, NatWest and Tesco - and would also be able to make withdrawals at post office counters. "RBS is fully committed to offering a free basic account for people who may otherwise struggle to access banking services," he added. "The vast majority of our current account customers are non-fee-paying and are not affected by this change."The bank refused to reveal exactly how many customers will be affected by the new regulations, but said the basic accounts market comprised less than 10 per cent of its total current account customer base. RBS has 13 million customers

Experts warned that the move could pave the way for banks to start charging for basic services.

"You cannot tell what will happen," said David Black, of financial researchers Defaqto. "But banks have to pay a flat fee for using other operators' accounts."

Lloyds TSB - owned by Lloyds Banking Group - also restricts customers with its basic "cash account" from using some ATMs.