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ombudsman news

issue 37

May/June 2004

giving all customers equal access to banking services

Making sure that all customers receive fair and equal treatment should be a concern of all firms. However, it is clear from some of the disputes that come to us - from a broad range of financial firms - that this is not always the case.

This article focuses on some types of discrimination that can occur. The illustrations we have used are taken from recent cases involving banking firms, although similar issues can arise across all areas of financial services.

Useful websites for information on discrimination include:

Disability Rights Commission
Equal Opportunities Commission

disability discrimination

The Disability Discrimination Act 1995 makes it unlawful to discriminate against people on the ground of disability. Since 2 December 1996, it has been unlawful for service providers, such as banks, to treat disabled people less favourably than others, for a reason that is related to their disability.

Since 1 October 1999, businesses have had to make "reasonable adjustments" for disabled people, such as providing extra help or making changes to the way in which services are provided. From 1 October 2004, they will have to make further "reasonable adjustments" to any physical features of their premises that make it difficult for disabled people to use their services.

So a firm cannot, on the grounds of a person's disability, refuse to provide that person with a service that it offers to other people. And it has a legal duty to make reasonable adjustments to ensure its services are accessible to disabled people.

Particular difficulties may arise in giving equal access to online facilities, and in relation to PINs (personal identification numbers).

The Disability Rights Commission supported a case where a firm refused to open an online bank account on behalf of a customer with a mental illness. The customer's son had an enduring power of attorney. However, the firm said that it could not allow the son access to internet banking on his father's behalf because (as a third party) the son could not comply with its security requirements. The case was settled after the firm agreed to change its policy.

In another case recently reported in the financial press, a firm told Mrs B, who had power of attorney on behalf of her elderly disabled mother, that she could only withdraw cash for her mother at the post office if she had a PIN - and that it could not give her a PIN because she was not the account holder.

The firm later changed its position and issued a PIN to Mrs B so that she could access her mother's account.

race discrimination

The Race Relations Act 1976 makes it unlawful to discriminate on the ground of race. It is unlawful to refuse a service, or to not give the same standard of service extended to others, on the grounds of race, colour, nationality or ethnic origin.

It is direct discrimination if a firm refuses to lend money because of the applicant's racial origin. But indirect discrimination is also unlawful. It would, for example, be indirect discrimination where a lender refused to lend money on properties below a certain value - if such properties were located in an area that was largely populated by a particular racial group - unless the refusal was justified on non-racial grounds.

sex discrimination

The Sex Discrimination Act 1975 makes it unlawful to discriminate on the ground of sex. It is unlawful to refuse a service to a woman, or, because of her sex, to treat a woman less favourably than a man in similar circumstances. The law applies equally to discrimination against men.

It is direct discrimination, for example, if a firm insists that if a married woman wants to apply for a loan, she must apply jointly with her husband - unless it requires all married applicants to apply jointly with their partners.

It is also direct discrimination if the firm offers a service to women on terms that are less favourable than those it offers to men. An example is if the firm offers a woman a loan only if she can provide a guarantor, but does not impose this same condition on men of a similar financial standing who apply for loans.

It is indirect discrimination if a requirement is applied equally to men and women but adversely affects more women than men, for instance if a mortgage provider lends only to people who work full-time.

other forms of discrimination

Discrimination can, of course, take many other forms. And customers can sometimes complain (incorrectly) of discrimination, when all that has happened is that a firm has properly exercised its commercial judgement as to whether to provide a particular service.

The Banking Code says that firms should act fairly and reasonably in all their dealings with customers. And the ombudsman service reaches its decisions on the basis of what is fair and reasonable. So we are unlikely to consider discriminatory behaviour to be fair and reasonable, even if it is not covered by legislation.

case studies - giving all customers equal access to banking services

37/1
disability discrimination

Miss A, who was partially sighted, asked the firm if it could let her have her bank statements in large-print. The firm was happy to oblige and all went well until Miss A applied for a loan from the same firm. Her application was turned down, and she eventually discovered that this was because the address she gave when she applied for the loan (her home address) did not match the address the firm had for her on its system.

This had come about because of the firm's method of producing the large-print statements, which involved Miss A's branch sending the statements to a branch in another town, where they were reproduced in large-print and then despatched to Miss A. The firm's system showed the branch in the other town as Miss A's home address.

The firm was apologetic, but said it couldn't change the system. Miss A accepted £400 compensation for the distress and inconvenience she had been caused.

37/2
racial discrimination

Mr K was a UK citizen of Somali origin. He applied to open a bank account and presented his passport as proof of identity. The firm kept the passport for a week, and then refused to open the account. The only explanation it gave was " problems with the current terrorist situation".

Mr K later accepted the firm's offer of £750 compensation for the distress and inconvenience he had been caused.

37/3
sex discrimination

The firm refused to give Ms Y a mortgage, because she was pregnant. Nowadays all women have the right to return to work after maternity leave, and many do. So the firm's practice was discriminatory on the grounds of sex.

37/4
other forms of discrimination

Mr B opened a deposit account. He had a certificate from the Inland Revenue confirming that he was a non-resident and could have his interest paid gross, not net, of tax. The terms of the deposit account that Mr B opened did not cover this point and the firm said that it was only on its offshore accounts that it paid non-UK residents gross interest.

Mr B pointed out that the firm paid gross interest to UK non-taxpayers, such as pensioners, and he claimed that the firm was discriminating against non-residents.

We did not uphold the complaint. We decided that the firm's decision to limit a service to UK residents (of all races and nationalities) was a commercial decision with which we should not interfere.

Walter Merricks, chief ombudsman

ombudsman news issue 37 [PDF format]

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.