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Banks: Closures

Question for Treasury

UIN 104718, tabled on 16 October 2020

To ask the Chancellor of the Exchequer, if he will introduce a banking service standard to prohibit the closure of the last bank branch in a community.

Answered on

21 October 2020

The decision to maintain a presence on the high street is a commercial one for the management team of a bank and Government does not intervene in those decisions.

The retail financial landscape is changing, as more consumers and businesses opt for the convenience, security, and speed of digital payments and digital banking. Banking service providers need to balance customer interests, market competition, and other commercial factors when considering their strategy.

However, the Government also firmly believes that the impact of branch closures should be understood, considered, and mitigated where possible so that all customers, wherever they live, continue to have access to over-the-counter banking services if they wish to use them. That’s why the Government supports the industry’s Access to Banking Standard which helps customers to understand the options they have locally to continue to access banking services, including specialist assistance for customers who need more help.

Alternative options include the Post Office, which allows 95% of business and 99% of personal banking customers to carry out their everyday banking at 11,500 Post Office branches across the UK.

In September 2020, the Financial Conduct Authority (FCA) published guidance setting out their expectation of firms when they are deciding whether and how to reduce their physical branches or the number of free to use ATMs. Firms are expected to carefully consider the impact of a planned closure on their customers’ everyday banking and cash access needs, and other relevant branch services and consider possible alternative access arrangements. This will ensure the implementation of closure decisions is done in a way that treats customers fairly.

Further to this, the FCA recently consulted on guidance for firms’ on the fair treatment of vulnerable customers, including those who are digitally excluded or have low digital skills. This consultation closed on 30 September and the FCA are currently considering the responses.

Protecting vulnerable consumers is a key priority for the FCA. While many firms have made significant progress in how they treat vulnerable consumers, HM Treasury and the FCA want to see the fair treatment of vulnerable consumers being taken seriously by all firms so that such customers receive consistently fair treatment. HM Treasury continues to work with firms and the FCA to ensure that the needs of vulnerable customers are met.

Answered by

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