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Department for Work and Pensions is seeking providers who can
supply products with extra budgeting functions to support claimants
as they move onto Universal Credit.
The Government expects interest from a wide range of financial
providers, including high street banks, mobile phone operators and
pre pay card providers.
Lord Freud, Minister for Welfare Reform, said:
"Accounts that provide people with extra budgeting services
could help to ensure people’s essential bills are covered – helping
them to build up their credit rating and break the cycle of
"We are anticipating the call for new financial products may
open up a new market place, where competition is strong. And we are
looking for a range of diverse providers to step forward to express
an interest, as we work towards the introduction of Universal
Credit in October 2013."
As part of the criteria, any potential new accounts must have a
series of essential features to help people on low incomes to
budget, but the final design will be left open to the market to
Consumer Focus, the statutory consumer champion for England,
Wales, Scotland and (for postal consumers) Northern Ireland,
welcomes this announcement.
Andy Burrows, Head of Post Offices at Consumer Focus
‘Our research shows significant need for budgeting bank
accounts, often referred to as ‘Jam-jar accounts’, to help people
manage what will be a major change in how benefits are paid.
Many people who could be badly affected by the introduction of
Universal Credit do not have a bank account and without assistance
may face real problems paying rent, utility bills and other
essential payments. Two-thirds of people who feel they will be
badly affected by the changes to Housing Benefit say a
jam-jar account would help them manage better.
‘We welcome the Government’s recognition that a range of
providers will need to offer budgeting accounts. Post Offices and
Credit Unions should play a key part, particularly for the 1.2
million working age people who have their benefits paid into a Post
Office Card Account (POCA). Our research shows significant
appetite to open accounts with trusted local providers, such as the
Post Office. For many POCA customers that do not have a bank
account, well-designed budgeting products could not only help
manage the transition to Universal Credit, but also help encourage
them into the world of mainstream banking and deliver real benefits
in terms of financial inclusion.’
Read the Turn2us Universal Credit information
Department for Work and Pensions news release (link opens in a new
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