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New financial products sought to help Universal Credit claimants - Turn2us

Department for Work and Pensions press release (link opens in a new window)The 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 financial exclusion.

"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 devise, including:

  • Support for claimants to budget and manage their money
  • Regular payments for housing and other main bills
  • Options for multiple income streams from work and benefits
  • Access to all claimants, irrespective of credit history
  • Options to build up a credit rating
  • Availability to people once they have moved off Universal Credit

Consumer Focus response

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 said: 

‘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 sheet

Sources: Department for Work and Pensions news release (link opens in a new window) 

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