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Face to face banking services

Volume 738: debated on Wednesday 18 October 2023

The petition of residents of Hornsey and Wood Green,

Declares that the petitioners are extremely disappointed at the announcement of the closure of Halifax's Muswell Hill branch in November 2023, further notes that bank branches are the heart of communities, and are relied upon by local communities, especially old and disabled people, those who need access to cash and those without internet banking; further notes that they are also vital for local businesses.

The petitioners therefore request that the House of Commons urge the Government to act to protect essential in-person banking services.

And the petitioners remain, etc.—[Presented by Catherine West, Official Report, 19 September 2023; Vol. 737, c. 1329.]

[P002857]

Observations from The Economic Secretary to the Treasury (Andrew Griffith):

The Government thank the hon. Member for Hornsey and Wood Green (Catherine West MP) for submitting the petition on behalf of her constituents regarding the closure of the Halifax Muswell Hill branch and the provision of in-person banking services.

The Government are sorry to hear of her constituents’ disappointment at the planned closure of the branch. The way consumers interact with their banking is changing. The Financial Conduct Authority (FCA)s Financial Lives Survey found that in 2022, 88% of UK consumers used a form of digital banking, such as an app or online banking platform,. Indeed, according to the branch closure document, over three quarters of the customers using the Halifax Muswell Hill branch have also used other Halifax branches, internet banking or telephone banking.

As with other banking service providers, Halifax will need to balance customer interests, market competition, and other commercial factors when considering its strategy. Although the Government can understand constituents’ dissatisfaction, decisions on opening and closing branches are taken by the management team of each bank on a commercial basis.

The Government hope that the hon. Member can appreciate that it would therefore be inappropriate for the Government to intervene in these decisions. Government cannot reverse the changes in the market and in customer behaviour; nor can it determine firms’ commercial strategies in response to those changes. Having the flexibility to respond to changes in the market is what makes the UK’s financial services sector one of the most competitive and productive in the world, and the Government want to protect that. Indeed, a dynamic and competitive financial services sector drives innovation and incentivises banks and building societies to keep developing their banking products and services, creating better outcomes for customers.

None the less, the Government firmly believe that the impact of branch closures should be understood, considered, and mitigated where possible so that all customers, wherever they live, continue to have appropriate access to banking services.

Guidance from the Financial Conduct Authority (FCA) sets out its expectation of firms when they are deciding 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 consider possible alternative access arrangements. This is to ensure that the implementation of closure decisions is done in a way that treats customers fairly. Last year the guidance was further strengthened to enhance protections for consumers that rely on branch services. The FCA is closely monitoring banks and building societies in this regard and if a firm falls short in their provision of reasonable alternatives, the FCA can and will ask for closures to be paused or for other options to be put in place.

In the customer information pack that Halifax has published for the Muswell Hill branch closure, customers are directed to the free-to-use ATMs at the nearby Nationwide Building Society, NatWest and Santander branches less than a mile away, as well as alternative Halifax branches in Wood Green—2.19 miles away—and North Finchley—2.7 miles away. Both of these branches are accessible from the closing bank branch via public transport.

Alternatively, Halifax customers can access everyday banking services via telephone banking, through digital means such as mobile or online banking and via the Post Office. The Post Office banking framework allows 99% of personal banking and 95% of business customers to deposit cheques, check their balance and withdraw and deposit cash at 11,500 post office branches across the UK.

The hon. Member highlights the experience of some of her constituents who are elderly or have disabilities. UK banks' and building societies' treatment of their customers is governed by the FCA in its principles for businesses. This includes a general requirement for firms to provide a prompt, efficient and fair service to all of their customers. The FCA’s handbook requires firms to identify particularly vulnerable customers, and to consider the needs of these customers appropriately. Furthermore, the newly implemented FCA consumer duty builds on the FCA’s work on vulnerability in recent years. It raises the standard expected from firms for all customers, including those in vulnerable circumstances. In addition, like all service providers, banks and building societies are bound under the Equality Act 2010 to make reasonable adjustments, where necessary, in the way they deliver their services.

Finally, in recognition that cash continues to be used by millions of people across the UK, the Government have legislated through the Financial Services and Markets Act 2023 to establish a new legislative framework to protect access to cash. The Act establishes the Financial Conduct Authority (FCA) as the lead regulator for access to cash and provides it with responsibility and powers to seek to ensure reasonable provision of cash withdrawal and deposit facilities for both businesses and personal customers. As part of this responsibility, the FCA must also seek to ensure that there is reasonable provision of free withdrawal and deposit facilities in relation to personal current accounts from relevant providers.

In the context of the Government legislation, the financial services sector is working together to develop and provide shared services. This includes a process for LINK—which operates the UK's largest ATM network —to assess a community’s access to cash needs. These assessments take place in the event of the closure of a core cash service or a request to LINK directly from a local community. As part of the assessment process, LINK takes into account relevant information such as the size of the population, number of shops, demographic data and the nearest alternative services. In circumstances where LINK considers that a community requires additional cash services, participating firms within the financial services sector will provide a suitable shared solution, such as an ATM, deposit service, or shared banking hub, for cash users in that community. While the Government understand that LINK has not recommended an alternative cash service as a result of Halifax's plans to close its Muswell Hill branch, petitioners may wish to contact LINK for further information. Contact details can be found on LINK’s website: www.link.co.uk/consumers/request-access-to-cash/