Universal Credit: Freud lays down criteria for new bank accounts

Published by 24publishing for 24dash.com in Housing and also in Central Government, Communities, Development, Local Government, Universal Credit

Ministers are calling for a range of suppliers to explore the feasibility of new financial products to help benefit claimants budget and manage their money under Universal Credit.

The Government is seeking providers who can supply products with extra budgeting functions to support claimants as they move to the new benefit from next October.

It said it expects interest from a wide range of financial providers, including high street banks, mobile phone operators and pre pay card providers.

The formal procurement paperwork is set to go out later today and the Government is putting between £80m and £145m available for the accounts.

Welfare reform minister Lord Freud 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.”

Any potential new accounts must have a series of essential features to help people on low incomes to budget. However, the Government said 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

The National Housing Federation said it hoped the Government's challenge to financial providers to design new products will create an account that will help people avoid falling into arrears and debt.

A spokesperson said: “But the process must move quickly as the changeover is just over a year away. We look forward to seeing the details of  DWP's plans - how much it is prepared to invest and how long it thinks it will take to turn the final design into a useable account that will help people living in social housing better manage their money and bills in time for next October.”