Can banking help break the cycle of homelessness?


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8th July 2021

They are often labelled the ‘forgotten’ members of society – and for the homeless, the Covid-19 pandemic has made their situation more difficult. In many cases, the support services and lifelines that homeless people depended on before the pandemic have disappeared, abandoned by a shortfall in funding or neglected due to changing priorities in a global pandemic. For those that relied on the generosity of strangers to get by, empty streets and abandoned business districts have also meant bad news.
Shelter, the UK homeless charity, has warned that the pandemic risks “turbo-charging” the country’s homelessness problem. According to the charity, there were more than 250,000 people living in temporary accommodation in England at the end of December 2020 – the highest figure for 14 years. The number of rough sleepers in England is thought to be more than 2,500.
Without an address, it becomes difficult for people to open a bank account or secure work, even on a casual basis. It leaves homeless people “trapped in a catch-22 situation”, according to the organisation Citizens Advice. In a report published at the end of 2018, it said that a lack of address was one of the biggest factors preventing people from escaping homelessness.
“A number of essential services require users to provide an address in order to access them,” the report explains. “The most notable problem is not being able to open a bank account, which significantly reduces homeless people’s ability to receive benefits and seek employment.”

Can banks tackle homelessness?

Since 2016, the nine largest current account providers in the UK have been legally required to offer customers something called a ‘basic bank account’. This is designed to improve access to banking for customers with a poor credit history. But banks are still required to obtain proof of address and a form of photo ID in order to open a basic account, meaning many homeless people and rough sleepers are excluded.
Until now, the stringent requirements faced by financial institutions when onboarding new consumers had prevented them from offering services to the most vulnerable in society – particularly those without a permanent UK address or with no access to photo ID.
HSBC has launched a scheme called ‘No Fixed Address’, which seeks to improve access to banking for homeless people and rough sleepers. Working in partnership with national and local charities – including Shelter and the Salvation Army – the bank is able to offer bank accounts to those without a fixed address by using the charity’s local address instead.
People wanting to take advantage of the scheme still need to find a local caseworker at one of the partner charities – but once they have, they can arrange an appointment in their nearest branch and apply to open a bank account using the charity’s address.
The ‘vicious circle’ that homeless people previously faced in opening bank accounts is well illustrated in new TV advertising launched by HSBC to promote the No Fixed Address scheme. In it, a young woman is seen being repeatedly denied services because she cannot provide them with an address.
The vicious cycle facing homeless customers. Courtesy: HSBC/YouTube
Another innovative programme looking to break the vicious circle is Proxy Address. It uses what it calls ‘spare addresses’ to provide a stable identity for those without a permanent address. The scheme works with the consent of the empty property’s owner – be it a private landlord or local authority – and duplicates existing data to ensure that the property, its post and its credit rating are all unaffected by its use as a proxy address. Crucially, it is free to the person who needs it.
The initiative has support from the likes of Geovation and Ordnance Survey and has successfully conducted a pilot programme in London which saw a small number of homeless people benefit from access to a proxy address.

'An address is a form of ID'

Chris Hildrey, the founder of ProxyAddress, says: “Thousands of people across the UK have already lost jobs, exhausted savings, or fallen into rent arrears during the pandemic. With the furlough scheme, Universal Credit increase and the ban on bailiff-enforced evictions all set to be removed this year, it is vital that those hit the hardest have access to a safety net when facing this cliff edge.
“An address is not just a location; it’s a form of ID and without one, people experiencing homelessness can be prevented from accessing vital services to help them get back on their feet. With this pilot, ProxyAddress is making its first real-world changes to help ensure that the loss of an address no longer means the loss of support.”
Crucially, it already boasts support from fintechs and banks – Barclays, Monzo, Monese and the identity verification platform Amiqus are all listed as ‘collaborative partners’ in the scheme.
Proxy Address explains how the initiative works. Courtesy: Proxy Address/YouTube
As the hangover from the pandemic continues into future years, it’s likely that homelessness – and access to banking for the homeless – will continue to be a significant challenge.
Onboarding requirements such as know-your-customer (KYC) and anti-money laundering (AML) legislation make it difficult for banks to respond effectively. But as these two great examples from the UK demonstrate, it is possible for banks, fintechs, charities and social enterprises to come together to establish a solution.
For both HSBC No Fixed Address and Proxy Address, the regulatory requirement remained the same; there was no relaxation of the rules. But their innovative approach allowed them to identify a workaround – and it may just provide crucial access to banking for thousands of homeless people.