The Chancellor guaranteed today that every adult in the UK would have access to a basic bank account. He said that the measure would lead to one million adults opening an account over the next five years.
The heavily trailed measure, designed to tackle financial exclusion, builds on existing efforts by the Treasury and the banking industry to encourage every adult to open a transactional current account.
About eight million adults have a basic bank account at present, according to the British Bankers" Association, aimed at those on a low income or those with poor credit histories who would not otherwise be approved for a standard account.
Basic bank accounts allow individuals to pay in wages, benefits and a pension and provide a cash card to withdraw money.
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A number of accounts also restrict standing orders, and others prevent customers from setting up direct debit payments from the account.
Since 2003, when the Government and the industry established a Financial Inclusion Task Force, the number of adults in the UK without a bank account has fallen from 3.75 million to 1.75 million.
The banking industry has questioned the need for the Government to guarantee access to banking facilities, insisting that any adult in the UK can open a bank account if they want one, except those individuals who cannot prove their identity a legal requirement when opening a new account.
The majority of banks and building societies will also refuse basic bank accounts to individuals with a record of fraud. Meanwhile, only two providers, Barclays and The Co-operative Bank, offer basic bank accounts to undischarged bankrupts.
A spokesperson for the British Bankers" Association said: "Everybody can have a bank account if they want one, unless (and this is rare) the law says they can"t.
"In recent years UK banks have worked with the Government to cut financial exclusion, halving the number of households without a bank account. Every month 40,000 more people open basic accounts."
Fears have been raised that a legal requirement to offer basic bank accounts could lead to an end of free banking for all customers as banks grapple with higher administration costs.
Michelle Slade, of Moneyfacts.co.uk, the financial website, said: "Banks will inevitably face higher costs if this legislation is passed, with the cost recovered through standard banking customers.
"The change could be another nail in the coffin for free banking, with banks looking to regain the additional cost potentially through the introduction of monthly fees."
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