Banking on a better deal

Housing officers are to become part-time bank managers in a new project to tackle financial exclusion, being launched tomorrow by Treasury economic secretary Melanie Johnson. The move is a bid initially to reach more than 20,000 housing association tenants whose poor credit rating, or level of debt, has prevented them accessing mainstream banking facilities. The idea could, ultimately, go nationwide.

Under the plan, the Woolwich bank is allowing housing officers to authorise opening of its "open plan" account. Tenants will not have to provide a passport or driving licence - though they will have to provide four other forms of identification - nor will they be credit checked.

To avoid being stigmatised as a poor person's account, the product is being marketed under the Woolwich's open plan service, which has 500,000 existing customers. The account does not come with a cheque card or cheque book, but holders may draw money from cash machines and pay for goods with a card that prevents them becoming overdrawn.

The account also allows for up to 14 separate savings "pots" to enable easier payment of bills.

Margaret Sandford, director of People for Action, the housing umbrella group which helped devise the scheme, says: "Tenants told us they didn't want to get into debt. We hope the account will build their confidence in the banking system and enable them to gain access to the cheaper utility bills offered to people who pay by direct debit or standing order."

The project is initially being piloted by six People for Action members - North British Housing in West Yorkshire, the Mercian and Family housing associations in Birmingham, Selhal in Oldham, Broomleigh in south London, and Leicester housing association, which is testing the scheme among black and minority ethnic tenants. If successful, Sandford hopes the idea will be rolled out nationally to 1.5m housing association households.

According to a recent survey by Broomleigh, about a third of social housing tenants and private renters living in Penge and Anerly, south London, found it difficult to pay fuel bills, had no banking service whatsoever and no savings. Martina Gavan, Broomleigh's community projects officer, says: "Paying for fuel bills with key meters is very expensive and tenants turn to loan sharks and get into a spiral of debt. We have been trying to gain access for our tenants to a number of high street banks, without any luck, so this project is very welcome."

The Woolwich says it recognises the obligation on banks to tackle financial exclusion. A spokeswoman points out:"These people don't go into branches and read the financial press to know that we have accounts designed for them. So one way to reach them is to do it via the housing officers with whom these people have a day-to-day relationship."