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Benefit Payments

Volume 450: debated on Tuesday 24 October 2006

To ask the Secretary of State for Work and Pensions what assessment he has made of the effect of his policy of encouraging the payment of benefit via bank accounts on the number of people going into debt as a result of banks imposing excessive penalty charges when the person exceeds overdraft limits or a direct debit or cheque are returned. (93224)

There is no reason to expect that those using an account to receive their benefit or pension are more or less likely to face bank charges than any other account holder.

Paying benefits into bank accounts contributes to the Government's wider financial inclusion agenda. For example, households that operate without mainstream banking services may pay higher charges for basic financial transactions such as accessing cash or paying utility bills; are more vulnerable to loss or theft through lack of security; and may face additional barriers to employment.

The Office of Fair Trading is currently examining charges in retail banking, including penalty charges on current accounts.