UK’s financial regulator urges banks to rethink branch closures

Financial Conduct Authority concerned vulnerable customers may be left without access to services

The UK’s financial regulator has called on banks to reconsider branch closures amid fears that vulnerable customers could be left without access to services.

The Financial Conduct Authority said that during lockdown branch closures should be paused or delayed if banks were unable to carefully assess the needs of customers and what alternative arrangements they could provide.

“Some banks and building societies have informed us that they are either going ahead with branch closures already announced, or announcing new branch closures during the current lockdown,” it said. “We are concerned that these activities could have significant consequences for customers.”

The FCA said lockdown meant it may be harder than usual to engage with customers on closure proposals, and some who would need access to in-branch services before a closure would not be able to visit. Customers who needed help setting up online banking may not be able to access that at present, it said.

This month HSBC said it would close 82 branches in 2021, and TSB and the Co-operative Bank have also announced closures since the pandemic hit.

The FCA issued guidance in September outlining how it expected banks to treat customers if they planned closures.

It said on Thursday: “Where they are unable to meet the expectations of our guidance during lockdown measures, they should consider pausing or delaying new branch closures where possible, particularly where this could have significant impact on vulnerable customers.”

Concern over those customers has led the consumer group Which? to write to the UK’s largest banks asking them to commit to maintaining access to cash, after its research found 13,000 cash dispensers had disappeared in just three years.

In a letter sent to the eight biggest retail banks, the organisation’s chief executive, Anabel Hoult, urged them to remain part of the Link and Post Office banking networks, saying this would help bring stability to the sector.

“Worryingly, Covid-19 has placed unprecedented strain on the cash system that was already in a precarious position,” she wrote. “Urgent steps must be taken to ensure that irreversible damage is not caused to the cash system until longer-term protections are agreed.”

Since the start of 2020, 3,300 free-to-use cash machines have closed across the UK, Which? said, and over the past three years the total number of ATMs has fallen from 67,300 to 54,400.

The pandemic has changed many people’s payment choices, and this week the FCA said it was considering raising the limit for contactless payments from £45 to £100.

However, research by Which? found almost 10 million people were not ready to stop using physical money. Despite last year’s budget announcing legislation to protect access to cash, there is no timetable in place for new laws to come in.

Which? is calling on banks to confirm they will continue to belong to the Link network of ATMs and to the Post Office banking framework until legislation comes into effect.

It said that if one of the major banks pulled out, this would make the schemes unviable and it would be “extremely difficult” to introduce access to cash in some communities if it was lost.


Hilary Osborne

The GuardianTramp

Related Content

Article image
Tesco Bank cyber raid 'unprecedented', says financial regulator
FCA chief tells MPs that ‘serious’ theft from 20,000 accounts may be linked via debit card flaw as customers report money transfered to Brazil and Spain

Jill Treanor

08, Nov, 2016 @11:48 AM

Article image
UK banks urged to ‘accelerate’ savings rates by financial regulator
FCA tells NatWest, Lloyds, HSBC and Barclays to act more quickly to support consumers after profiteering claims

Kalyeena Makortoff Banking correspondent

06, Jul, 2023 @5:16 PM

Article image
Regulator warns UK banks over miserly savings rates for loyal customers
FCA says it will consider ‘onerous interventions’ if it concludes ‘loyalty penalty harms’ not being addressed

Rupert Jones

20, Apr, 2023 @1:00 PM

Article image
Banks with lowest savings rates to face ‘robust action’, warns UK financial watchdog
FCA gives banks four weeks to justify savings rates as it lays out 14-point plan to monitor treatment of customers

Kalyeena Makortoff Banking correspondent

31, Jul, 2023 @4:12 PM

Article image
Regulator warns of dangers of mobile banking

Fraud, IT meltdown and even the 'fat finger' … mobile banking services can often go wrong, warns the Financial Conduct Authority

Rupert Jones

27, Aug, 2013 @3:34 PM

Article image
Watchdog criticised over 'disappointing' action on high-cost credit
FCA will require banks to alert customers but falls short of capping fees that affect 19 million customers

Patrick Collinson and Richard Partington

31, May, 2018 @3:55 PM

Article image
Bosses at City firms could face fines for failing to prioritise consumers
FCA’s new rules are expected to help reduce call wait times, end rip-off charges and make it easier to change investments

Kalyeena Makortoff Banking correspondent

26, Jul, 2022 @11:01 PM

Article image
HSBC overdraft rate to quadruple for some customers
Eight million users will pay more for going into the red after FCA’s borrowing shakeup

Rupert Jones

04, Dec, 2019 @5:32 PM

Article image
FCA unable to estimate future PPI cost to banks
Regulator admitted costs could not be predicted, as it sets out plans for a time limit on claims despite opposition from consumer groups

Jill Treanor

26, Nov, 2015 @2:12 PM

Article image
City regulator proposes financial advice shakeup
FCA says government should help savers unwilling or unable to pay for advice in investing small sums of money

Sean Farrell

14, Mar, 2016 @9:41 AM