Banks are merely paying lip service to helping vulnerable consumers and are failing to meet the needs of those who are financially excluded, Citizens Advice said today.

The charity said many banks were refusing to let people open basic bank accounts, and those who did have one of the accounts were often hit with high charges.

It warned that the behaviour of banks was causing financial hardship for many people, and was putting a number of Government policy objectives at risk.

Around 2.8 million adults in the UK, the equivalent of one in 12 households, do not currently have a bank account.

All benefits and state pensions now have to be paid directly into a bank account, and as a result banks have been under pressure to offer basic accounts which offer standing orders and direct debits but not overdrafts, and can be opened with less stringent identity checks.

But Citizens Advice said despite commitments in the Banking Code to offer basic bank accounts, many banks continued to put unreasonable obstacles in people's way, such as insisting on certain forms of ID or failing to provide any information about the accounts in branches.

It said people who were able to open one of the accounts often ended up paying a high price for a second class service, with the accounts becoming a cause of debt problems, rather than a tool to help them manage their money better.

It said banks would charge people up to £39 for a single failed direct debit, often caused by them receiving their benefits or tax credits late.

They would also take money out of the accounts to pay outstanding debts, often leaving vulnerable customers with too little to live on, putting them into rent arrears and leaving them facing the risk of being evicted.

At the same time the group said banks often took ten days to clear a cheque paid into a basic bank account, compared with three to four working days for a standard account.

The group, which is today giving evidence before the Treasury Select Committee for its inquiry into financial exclusion, said people who were not able to open basic bank accounts usually had to fall back on expensive cheque cashing services, which charged an average of ten per cent of the cheque being cashed.

Teresa Perchard, Citizens Advice director of policy, said: "The issue of access to bank accounts has become all the more urgent with the Government's announcement that from 2010 it will no longer fund Post Office Card Accounts, which are currently used to pay pensions and benefits to around four million people.

"At the moment many banks are just paying lip service to financial inclusion."

The group is calling on banks to make basic bank accounts available to people in financial difficulties and to provide the same standards of service as they offer to current account customers.

It also wants them to cap the charges for failed direct debits and standing orders to a reasonable amount.