More Time Needed! Which? Asks Banks To Halt Branch Closures

December 14, 2021
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Consumers’ association Which? is calling on banks to pause their branch closures until the UK finds a solution to protect access to cash.

Consumers’ association Which? is calling on banks to pause their branch closures until the UK finds a solution to protect access to cash.

Bank branch closures have been a concern for many years in the UK. Although the pandemic slowed down the process, Which? claims banks are now closing branches at an accelerated speed.

According to data released by Which?, banks have been closing their branches at a rate of around 54 each month since 2015, but this number rose to 99 per month during the summer months of 2021.

There have been 736 bank branch closures planned for this year, with another 220 already announced to close in 2022, representing a significant portion of the total number of 8,805 bank and building society branches.

Banks are justifying closures on the grounds that footfall has decreased significantly at branches in recent years as customers increasingly shift their banking interactions to digital channels.

According to UK Finance, in 2020, 72 percent of UK adults used online banking and 54 percent used mobile banking. Meanwhile, visits at bank branches fell by 26 percent between 2012 and 2017.

The pandemic has accelerated this shift away from branches. A July 2021 YouGov survey found that 51 percent of UK customers said they never or hardly ever go to bank branches, up from 35 percent in July 2019.

Although keeping those branches open is costly for banks, many people and small businesses still rely on local banks. These customers are typically those who either do not want to or cannot engage with the digital banking services or live in rural areas, where there is often poor broadband and mobile coverage, and a higher proportion of elderly customers.

To address these concerns, in March 2020, the government committed to legislating to protect access to cash. HM Treasury launched a consultation on access to cash this July, which closed in late September.

At the same time, UK Finance, along with the largest retail banks including Barclays, HSBC, Lloyds and NatWest, made commitments to continue to preserve access to cash for consumers and businesses.

However, Which? is now concerned the pace by which banks are closing their branches may undermine these proposals before solutions to protecting access to cash can take effect.

Which? chief executive Anabel Hoult wrote to banks in the Cash Action Group (CAG) warning that the rate of bank branch closures “seriously undermines industry efforts to address dwindling cash access, and is calling on banks to pause any programme of branch closures until the group’s proposals are rolled out”.

The letter includes three expectations that Which? believes any future closures should meet.

It calls on banks to carry out an independent assessment of the affected community’s cash needs before any closure takes place, and make that assessment available to the public. It also asks banks to ensure that “seamless access to the most appropriate type of provision is put in place to ensure that there is no gap in provision for those who need it, particularly the elderly and vulnerable”.

If banks are unable to meet these commitments, Which? urges banks to pause their branch closure programmes until they can or until legislation to protect access to cash has been implemented.

It will be interesting to see how much weight this latest effort by Which? to halt branch closures will have on UK banks, especially given previous efforts to halt branch closures have failed.

In 2016, the Campaign for Community Banking Services (CCBS) ended its 18-year campaign to halt branch closures after its founder, Derek French, conceded defeat: “[Branches] are being hit by closures and we don't want people to think they can stop it...There's no hope of changing anything."

Which? themselves have for many years campaigned to reduce bank branch closures. It complained in 2020, that rules for assessing branch closures were not being adhered to. "Despite the introduction in 2017 of a code requiring banks to assess the impact on communities of branch cuts, a Which? investigation found that HSBC, Lloyds Banking Group, Santander, the Co-operative Bank, TSB, and Virgin Money have never reversed a closure decision," the consumer watchdog complained.

In 2018, it called on banks to justify nearly 13,000 bank branch closures since 1998 that have left millions of people struggling to access vital financial services across the UK.

Although bank branches are an important source of basic financial services for many people, particularly in more remote locations, banks will be able to point to the fact that many of these locations have a serviceable Post Office where customers can access basic banking, including cash services.

Everyday banking services are available across the network of 11,500 Post Offices across the UK, enabling customers of high-street banks (covering around 99 percent of UK bank accounts) to deposit and withdraw money.

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