Bank accounts and insurance: access in prison and beyond

Minutes of the All-Party Penal Affairs Parliamentary Group, held on 20 November 2012 at 5.00 pm in Committee Room 7

Speakers: 

Chris Bath, Executive Director UNLOCK
Lloyd Adams, British Bankers’ Association
Nick Starling, Director of General Insurance, Association of British Insurers
Jonathan Smith, St Giles Trust

Present:

Paul Goggins MP, in the chair
Damian Hinds MP
Baroness Howe
Paul Maynard MP
Lord Taylor of Warwick

Paul Goggins MP opened the meeting by drawing attention to the recently published report on the work of the group over the past two years. This was a very good summary of the issues covered, and he thanked all those involved.

He then introduced the speakers on today’s important topic: banking and insurance services for prisoners and ex-prisoners. It was very good to have representatives of the industry present and the meeting looked forward to hearing from them. He introduced the first speaker, Chris Bath, Executive Director of UNLOCK.

Chris Bath began by saying how pleased he had been to be invited to speak. He continued: ‘The financial inclusion of people with convictions has been central to our work as a charity for the last seven years and probably longer.  Today is a celebration and congratulation to the financial services sector for what has been achieved. It is unusual to be in this House and not doing a bit of banker-bashing. It is at the same time an opportunity to remind ourselves that the job is not quite done yet.  Can I just briefly introduce the insurance issue and the banking issues, and then others will talk a bit more about those.

First the insurance issue. Here we are talking about more than the 80,000 or so people in prison but also the 9.2 million people in the country with criminal records, as recorded on the police national computer. What has been in place is something akin to a blanket exclusion for people with unspent criminal convictions, especially in the home insurance market, and the families they live with as well.  There have even been cases of some insurers using the fact that individuals are expected to proactively disclose their unspent criminal convictions, even if a question isn’t asked on the insurance application form, to later avoid a perfectly genuine claim.  Thankfully there is not too much of that going on.

UNLOCK has tried to act practically, to corral together those specialist insurers who will provide a service for this market – and there are a growing number of organisations that will; we have about 20 specialist brokers on our list.  We are very grateful to members of the House for passing the Consumer Insurance Disclosure and Representations Act, which from March 2013 will certainly mean a fairer situation in which insurers will be required to ask a specific question about convictions if they plan to later use it to avoid a policy. So there will be some clarity at least, for insurers and for people with convictions.

We are also grateful to the House for some changes to the Rehabilitation of Offenders Act that were brought in with the Legal Aid Sentencing and Punishment of Offenders Bill which will mean that from spring 2013 many more people will be able to take advantage of the protections of the Rehabilitation of Offenders Act (ROA) and be able to consider themselves rehabilitated even if it is many years after the fact. There are still some challenges. The reform of the ROA is not perfect from our perspective. It still means that people sentenced to more than four years will never be legally rehabilitated and will have to carry unspent convictions for the whole of the rest of their lives, which seems a bit out of kilter with what we know the evidence shows. If people go two or three years without committing any offences they are very unlikely to commit any further offences.

We would still like to see more of the main stream insurance industry taking a data driven risk pricing model that is geared to individuals, because of course if the insurance industry does not insure people with convictions it is very hard for them to build up the data to make a risk based approach work. And there are some real difficulties about the new periods in the Rehabilitation of Offenders Act and the Department of Transport’s endorsements on licences. Endorsements on licenses in motor insurance can go up to eleven years, and the ROA is saying that a fine is spent after a year. That obviously makes it very different, and very difficult for insurers, so we need some clarity from various departments of government.

On banking, it may not surprise you to learn that many people in prison don’t have a bank account, or lose it during the process of the criminal justice system. Basically these days without a transactional bank account you are persona non grata. You can’t access work or benefits. Even education grants can be very difficult to access. The main issue is that many people who end up in prison have no identity documents, and the banks therefore find it very difficult to understand exactly who they are. They are of course concerned about the FSA coming down hard on them for not knowing their customers. There was a lot done around that: pilots that then turned into bigger projects with leading banks. Halifax in 2005, Co-op in 2006, and Barclays starting in 2008, have led us to a situation now where 100 prisoners across the estate have got a functional relationship with a bank. Santander are in the middle of a five prison pilot, and HSBC who have recently piloted in three prisons are now reviewing how that has gone and how the processes might work.

Future challenges: there is one bank I haven’t mentioned that we would like to see engaged. We hope HSBC’s review doesn’t last too long, and that they will restart by the end of March, as they committed to do, and that Santander will roll out from its pilot. But of course it’s impossible not to raise the matter of the lack of resources in the prison estate. This morning I was at Chris Grayling’s speech at which he said we should have not a smaller prison estate but a cheaper one. It is quite hard for a lot of people to see where those further savings are going to come from. We don’t want to put in danger the commitment that the banks have made by lack of resources on the ground.’

Paul Goggins MP thanked Chris Bath very much for his presentation and introduced Lloyd Adams from the British Bankers’ Association. 

Lloyd Adams began: ‘Recently I was the guest of UNLOCK, the National Offender Management Service, and a Prison Governor, and I visited HMP Wormwood Scrubs. We had the opportunity to have a tour round their education system, and to see how well prisoners are supported there. We got talking to one particular gentleman who had three months left in his sentence and had never had a bank account before. We asked him why he wanted one. Quick as a flash he came back and said: ‘I want it for three reasons. Firstly, when I leave prison I need somewhere to have my benefits paid into. Secondly, when I get a job my employer needs somewhere to pay me. And thirdly, if I do well with this account, eventually they’ll give me a credit card and eventually I’ll get a mortgage’. I thought that is exactly what prison reform should be about – someone who has never had a bank account before will be leaving prison with their account set up and with the right sort of aims in place to progress.

So I’m pleased to be here today, and quite genuine in being able to say that the banking industry is unanimous in our agreement that prisoner banking is a positive social action and that providing financial capability and education to prisoners is fundamental to the rehabilitation of prisoners and reducing reoffending.  Several BBA members, as we have heard, have been putting into action a variety of programmes and projects in relation to prisoner banking. This includes various pilot schemes, and education projects for both inmates and prison staff. I won’t repeat the list, but Barclays, HSBC, Lloyds, Halifax, Santander and Co-op are involved, a broad range of some of the largest high street banks, which is great. 

In preparation for today I asked banks what could be done to improve how we get accounts to prisoners. The focus was on partnership: this broke into three different areas. The first key success factor is to build the partnership between the prison and bank – over and above prisoner and the bank. This requires buy-in from staff within the prison, to get communication between the bank and the prison so that we can get the right information back from the prisoners. This is not rocket science; it could just mean a named individual or team within a prison. This would show the commitment and willingness we need to make these partnerships effective. 

Secondly, we would like to get to a stage in the future where individual prisons have partnerships with a range of banks. Not only would this be beneficial to prisoners as customers, giving them more choice, but it would also lessen the regional resource burden on the banks, in different areas around the country. Thirdly, our members stressed the importance of UNLOCK, NOMS and other prison organisations to continue their great work with prisoners to ensure they are supported, well financially educated and understand the importance of bank accounts.  

Finally, the BBA would like to formally thank UNLOCK and NOMS and congratulate them on their work. Both organisations have been very helpful to the BBA and our members in getting us to understand what the issues are around financial education for prisoners, and what we need to do to help serve these people better. We look forward to working with them in the future’.  

Paul Goggins MP thanked the last speaker, and welcomed Nick Starling.  

After thanking the group for its invitation Nick Starling began: ‘The ABI recognises that access to, and fair treatment by, financial services is crucial for offenders and is a key part of financial inclusion. In 2011 we teamed up with UNLOCK to produce a consumer guide, which sets out what people with criminal convictions need to disclose. It explains why some convictions are relevant to insurers. To give an obvious example if your conviction is for insurance fraud that might have an impact on the way you are treated by an insurance company. It sets out the requirements of the Rehabilitation of Offenders Act and gives advice as to where to go for help. It is also a good practice guide for insurers, which points them in the direction of how they should ask questions, to make sure they are clear and concise, and enable them to offer cover to people with convictions, unspent convictions wherever possible, so that they can quickly return to cover if they are excluded.

To talk about the two specific issues that we were asked to: the first is the Consumer Insurance Disclosure and Representation Act. We don’t think that is going to make a great deal of difference to insurance practice, because by and large the Act encodes what has been happening with regulation. The key thing in the Act is that insurers have got to be quite clear in the questions they ask. Previously the legislation that governed insurance was the Marine Insurance Act of 1906. That had a catch-all at the end which said that you have got to disclose anything that might be of relevance to your insurer.  Now for a long time you haven’t been able to do that, and if the insurer tried to avoid an insurance contract on the basis that they had not been told something that they had not asked, the Financial Ombudsman’s Service would almost certainly overturn that decision. The Act very helpfully enshrines that in legislation.

Perhaps I could give an example of the way this sort of question should be asked. I will use a different sort of example, around smoking. If you are applying for life insurance, an insurer can’t just say: ‘Do you smoke: yes or no?’  If you tick ‘No’ it might be because you gave up yesterday, or because you are pregnant, or because you have never smoked. An insurer has to ask much more structured questions. For example: ‘Have you ever consumed tobacco products? If so what were they? When did you stop?’ And so on. So questions need to be much more focused down on what information is needed, and that will apply to situations where you have unspent convictions.

We are doing some work with the Financial Ombudsman’s Service around the way to ensure clarity of questions, but we are also doing some work which means that it’s not necessary for the customer to disclose themselves. An example of this, to which I will come back in a moment, is motor insurance.  When you apply for motor insurance, as you probably know, you put in the registration number, and up will come the details of your car. You then put your postcode in and up will come the details of where you live. We are working with the DVLA on a similar project where you will put in your license details. It won’t come up with all the details on the license but the insurer will know if you have got penalty points on it. So you don’t need to disclose them yourself: the disclosure is automatic.

In terms of the Rehabilitation of Offenders Act, we completely understand the intent of the legislation in improving the life chances of people with convictions and we support that goal. But our concern is that it does have some unintended consequences in terms of insurance. In particular that relates to what I have just been talking about, access to DVLA data. There is a slightly perverse situation in that if you have a disqualification for driving you will not have to disclose that once it is spent, which could be after a year. But for a lesser offence which has penalty points, the disclosure may be three years. So there are some slightly perverse things going on. We just need to make sure there is as much clarity as possible. There are reasons why, particularly with driving where disqualifications and penalty points are important in risk assessment terms, and we want to make sure that there is a sensible interval during which that can be counted by insurers before that conviction is spent. 

My final comment is that we will obviously continue working on this issue. When these issues on the Rehabilitation of Offenders Act are sorted out we will revise our guidance to reflect what is in it.’

Paul Goggins MP thanked Nick Starling very much and introduced the final speaker, Jonathan Smith, an addition to the published list. 

Jonathan Smith began: ‘I speak from the other side of the wire. I am that ex-offender. Lloyd Adams has very eloquently explained some of the practicalities about why having a bank account is a good idea for an ex-offender. Just to tell you a little bit about my experience: I was in an open prison called Hollesley Bay, just outside Ipswich, a couple of years ago. Having gone into prison with the loss of everything, I had no bank account, no ID, no anything. I was approached by staff one day and told about this wonderful scheme which would allow me to get started again. Very simply, the bank was Barclays and they had the most amazing very straightforward system for getting a bank account open. I would highly praise them, and UNLOCK for organising it, and for the way that is done. The account is opened, you have the bank card and details a couple of weeks later, and they are kept in your private property until you are released from prison. So you are actually ready to go the day you get out.

But to me the biggest things are the personal things. Self-esteem is a big thing and the bank account helped a great deal with that. Can you imagine what it is like not to have a bank account? Just for a moment. Not so much the practicalities but what it says about you. Why haven’t you got one? People give you funny looks, or you suspect they do. Getting a bank account in prison made me feel a great deal better about myself; that I belonged, and that reintegration was possible. Prison, for all the wrongs you have done to get you there, is a very lonely place, and that’s one of the problems when it comes to reintegrating when you get out. Anything that can be done to improve things there will help people. 

Confidentiality is another thing: the way the accounts are set up. When you go to your branch when you get out, the staff don’t know you are an ex-offender. There is nothing on the system to say: this man is a former criminal; this account was set up in prison. That’s a fantastic feeling: to walk in to a branch as a normal citizen. One of the things that really hit me when I came out of prison, when I got onto the Jubilee line to head home, I was absolutely paranoid, that I had ‘prisoner’ stamped across my forehead. I kept looking round the carriage thinking ’they know’. And I’m not normally a paranoid person. A lot of people go through that. But when you walk into a bank branch and know they will treat you as a normal customer, and that rubber stamp on your forehead is no longer there, that is a fantastic feeling.

There are too many things, emotionally, that drag people back into prison. I am very fortunate. I work for St Giles Trust now, and we have a lot of experience working with ex-offenders, and anything that can be done to help, both on a practical and an emotional level, to stop people being dragged back into it has got to be good. I know it sounds strange but I think bank accounts and having them set up for you, can help reduce reoffending. It’s one thing out of the way. You’ve got your benefits when you come out, you get paid when you find employment, it’s just one less box you have to tick. I think it’s a fantastic scheme and long may it continue, and be rolled out across the estate.’

Paul Goggins MP thanked the last speaker very much indeed.