Banks will be encouraged to offer more accounts to bankrupts under new changes that will be made to insolvency law.

Most banks will not offer even basic accounts to undischarged bankrupts – those who remain legally bound by bankruptcy – because they can be pursued by trustees in such circumstances.

The Government wants to protect banks, so they give bankrupts more opportunities to get back on their feet.

Business minister Jo Swinson has announced that bankruptcy trustees will be restricted from holding banks responsible for the loss of any new money that has been paid out from a bankrupt's account.

The change will mean that a bankruptcy trustee – who acts as an impartial intermediary between a bankrupt and creditors to see how much of the debt can be reclaimed – will have to serve banks with a notice expressing interest in any new money entering a discharged bankrupt's bank account.

If they do not serve this notice, they cannot hold banks liable should the money leave the account.

Currently, no such notice has to be served and trustees can chase banks if they feel they were entitled to a share of the cash.

Jo Swinson said: "Having access to a bank account means being able to make vital transactions quickly and safely, avoiding the risk of carrying around large sums of money.

"Most of us take these everyday tasks for granted, but for bankrupts attempting to make a fresh start, they can be a whole lot more stressful.

"Offering an account will remain a decision for the bank, but I am pleased with the positive response we've seen already. I'm confident the change will offer a lifeline to vulnerable people who have struggled to access basic financial services."

The amendment to existing insolvency law is expected to be put forward when parliamentary time allows.

The move was welcomed by Gillian Guy, chief executive of Citizens Advice, who said: "It is vital undischarged bankrupts can get a bank account to get their finances back on track. Without one, it's difficult for them to receive wages or pay bills by direct debit."