Question for Short Debate (Lords) on High Street Banks and Banking Hubs - Jan 25

Asked by

Baroness Tyler of Enfield

To ask His Majesty’s Government what assessment they have made of the impact of the closure of high street banks on local communities, and the need for a national network of banking hubs.

The Deputy Speaker (Baroness Fookes) (Con)

My Lords, I remind the House that we are very tight on time and it behoves all noble Lords to speak within the amount allowed.

Baroness Tyler of Enfield (LD)

My Lords, I declare an interest as a member of the Financial Inclusion Commission and president of the Money Advice Trust. I am grateful to the Library for its excellent briefing and to the many external organisations that have provided me with briefings. I have been struck by the strength of feeling expressed.

It is indisputable that the whole banking landscape has changed beyond recognition in the past five years. The rapid transition to digital banking and a broadly cashless way of life suit a lot of people. I do a lot, but by no means all, of my personal banking online but often need to speak to someone on more complex matters, which is getting increasingly difficult. The blunt truth is that an increasing number of people and communities are being left behind by the digital revolution and their basic banking needs are barely being met. In my view, the banking transformation has happened without proper engagement with its customer base, certainly without the consent of many vulnerable groups and communities. It has simply been done to them and they feel powerless. Between 5 million and 8 million people are estimated still to rely on cash and many on low incomes use it to budget. They often rely on face-to-face contact to manage their basic banking services. These people are likely to be digitally excluded and financially vulnerable.

The UK has lost over half of its branch network—more than 5,800 branches—since 2015. According to Which?, 30 parliamentary constituencies now have no permanent bank branches and a further 49 are down to their last branch. It has been estimated that banks are saving up to £2.5 billion annually so this new banking model suits them very well. Some 645 branches closed last year, with Barclays leading the pack with 180. Some 200 closures are already scheduled for this year. The trend is towards remaining branches being increasingly concentrated in bigger city centres, leaving large swathes of the country as banking deserts. I note with interest that Nationwide is currently the provider with the most branches remaining open across the country and has pledged not to leave any town or city in which it is based until at least 2026.

Research evidence shows that the groups most badly affected are people with disabilities, older people and people living in rural areas. Last June, a Which? survey found that over half of disabled bank customers say that bank branch closures have had a negative impact on their ability to access vital banking services. On older people, over a quarter of over-65s predominantly bank face to face in a branch or another physical location, such as a post office. Only 14% of the 85-plus group bank online, with 58% relying on face-to-face banking. According to Age UK polling, the main reasons for older people feeling uncomfortable with online banking are fear of fraud, a lack of trust in online banking services and a lack of IT skills. Further, people living in rural communities where digital infrastructure can be poor often have to travel miles to reach their nearest alternative source of cash and are also among the most reliant on bank branches and cash access services.

It is not just individuals who are affected. Small businesses have raised concerns that branch closures have reduced productivity, due to time spent away from their businesses while having to travel further to access banking services, and reduced their ability to manage cash flows. The NCVO says that local branch closures continue to have a negative impact on charities and voluntary groups. Many charities and community groups cannot access counter services to pay in cash—including charities that operate a trading arm that accepts cash, for example a café. A 40-mile round trip to do something like adding a signatory to an account is now not uncommon.
There is a clear degree of overlap between digital and financial exclusion. The House of Lords Financial Exclusion Select Committee found that 1.7 million households have no mobile or broadband internet at home; up to 1 million people have cut back or cancelled internet packages in the past year as the cost of living challenges bite; and around 2.4 million people are unable to complete a single basic task to get online, such as opening an internet browser.

Having made the case for why action is needed, I now turn to what needs to be done. I emphasise that this is not just about free access to cash, vital as that clearly is and where we have already seen welcome action from government. Some people want and need face-to-face banking without having to make a long journey. It may be to do with probate; powers of attorney; support with fraudulent activity; larger payments and transfers; or help with mortgages and loans.

As I have said before in this Chamber, I am a real fan of shared banking hubs—they are usually operated in partnership with the Post Office—which offer customers easy access to cash, deposit facilities and payment of utility bills, as well as face-to-face banking for customers of all major high street banks on more complicated matters. They are an innovative and cost-effective solution. Where they exist, research by Age Concern finds that they are proving popular with local communities, but the roll-out of shared banking hubs has been far too slow. Banking hub services have now opened in 31 communities and Cash Access UK expects to open at least a further 70 hubs this year. However, this leaves a gaping hole compared with the huge number of branches closing.

Last year, the Financial Services and Markets Act gave the FCA broad powers on how banks set up shared services to support access to cash, putting LINK’s work as a co-ordinating body on a statutory footing for access to cash. The allied Treasury policy statement was couched almost entirely in terms of access to cash and deposits but had little to say about protecting in-person banking services. Thus, basic banking is currently provided in hubs on a voluntary basis and the regulator lacks teeth in this area.

In my view, the Act was a missed opportunity. It could have put access to physical banking services for those who need them on a statutory basis and provided a real impetus to speed up the roll-out of banking hubs, including support for digital inclusion. Banking hubs could have an important role to play in delivering a national programme of digital inclusion training to equip people of all ages with digital financial skills.

The FCA is currently consulting on how it will regulate to protect access to cash, which makes this debate very timely. However, in its consultation, the FCA makes it very clear that its new responsibilities extend only to access to cash and not to bank branch closures, face-to-face banking services or digital inclusion.

Given the unacceptable gap between the closure of the last branch in town and the opening of the banking hub, my main contention today is that the last branch in town should not be permitted to close until a local banking hub is open and an appropriate number of cash access points are operational. February marks the third anniversary of the regulator consulting on the

“fair treatment of vulnerable customers”,
which provides an opportunity to review it, based on the lived experience of consumers who have lost their local branches since 2021. It is surely within the powers of government and the FCA, working with UK Finance, to get the players around the table without delay and agree a commitment that, where the case for a banking hub has been made and recommended, the last branch in town will not close until the hub is open. In my view, that is entirely consistent with the FCA’s requirement to treat customers fairly and to provide them with the support they need under the consumer duty.

What is the Government’s role? To date, the Government have said that it is not their place to get involved in commercial decisions. This misses the point that access to banking is an essential service, without which it is impossible to get by. Although banks are clearly commercial entities, they also have a social purpose and a universal service obligation. We need to put rocket boosters under the rollout of shared banking hubs, so I call on the Government to set clear expectations for the banking industry to deliver a minimum number of shared banking hubs within a set timeframe. Different figures have been mooted: some people are talking about the low hundreds, while LINK has suggested that 1,000 hubs could be in place by 2028—that sounds more like a truly national network.

I end with some questions for the Minister. What steps are the Government taking to make sure that face-to-face banking services are protected for those who need them? What are the Government doing to accelerate the rollout of banking hubs, and will they set a target for the number of shared banking hubs within a set timetable to speed this up? Are the Government confident that the FCA has the powers and resources it needs to support the rollout of banking hubs across the country?

How do the Government propose to ensure that banking hubs are providing the face-to-face services that customers and communities need? Allied to that, what work have the Government done, or planned to do, to define what a banking hub is and to specify the services one must provide to qualify as a hub? What plans do the Government have to ensure that banking hubs play a role in supporting the transition to a more digital economy? Finally, will the Minister agree to meet with me to discuss these matters?

2.47pm
Lord Rogan (UUP)

My Lords, I congratulate the noble Baroness, Lady Tyler, on securing this important and timely debate. The issues she raises are UK-wide, but your Lordships will understand if I concentrate my remarks on the situation in Northern Ireland, which has a large rural community affected by these closures. But, as we know, this situation also affects urban dwellers and customers just as much.

In Northern Ireland, more than 50 bank branches have closed since 2020, and that number is set to grow again this year. Next month, Barclays will close two of its remaining branches in the Province: one in Newry and one in Coleraine. February will also bring the first of 10 planned Ulster Bank closures, when the Ormeau Road branch in Belfast shuts its doors. Over the next two months, two more will close in Belfast, together with branches in Ballynahinch, Crumlin, Downpatrick, Glengormley, Lisnaskea, Lurgan and Londonderry. Halifax also plans to close its branch in Larne in May.

This seemingly endless round of closures is having a profound and detrimental impact on community life in Northern Ireland, especially in rural areas and on older people who have spent a lifetime banking in person. When banks close their branches, their free ATM services are generally casualties as well. As in Britain, trying to find a high street cashpoint in Northern Ireland is often the worst kind of treasure hunt, with a minimal chance of finding gold at the end of the rainbow. More often than not, the only ATMs available are in shops or stations, where a charge is often levied for even the smallest withdrawal.

I understand the dash towards a cashless society, the pace of which was most certainly quickened with the arrival of Covid-19. But surely some modicum of common sense must prevail—particularly, again, when it comes to older people, including my wife and I, who have spent a lifetime with the comfort of having cash in their pockets and are not about to change their habits now. Internet banking is simply not for everyone, particularly those of us of a certain vintage.

Not so long ago, and certainly when I was a young man opening my first bank account, in small rural towns and rural areas of Northern Ireland the local doctor, the principal of the local school and the local branch manager were all pillars of civil society. They knew you and your background, and you could go and speak to them personally. When you needed a mortgage or wanted to have an overdraft facility, you simply applied for an interview with a local branch manager. Often, having explained the situation, a decision could be made that very day, and, if not, the request was sent up to headquarters in Belfast and a decision was taken in the next four or five working days. This personal contact is lost to impersonal automation.

The noble Baroness, Lady Tyler, rightly references in the title of her debate the desire for a national network of banking hubs. Although they may not deliver the quality of service of local bank branches, they are better than nothing, which is what many small communities in Northern Ireland have, sadly, been left with. Just last month, the Province’s first-ever banking hub was opened in Kilkeel, County Down. Operated by a non-profit firm, Cash Access UK, it offers a Post Office counter service that allows customers of all major banks to carry out regular cash transactions. Five different local banks are rotating, with a different branch available each weekday, allowing customers to talk to their own bank in a dedicated meeting room. I understand that four more banking hubs are expected to open in Northern Ireland, in Comber, Warrenpoint, Portrush and Newcastle. This is welcome news, although it will still leave large parts of the Province without in-person banking facilities. To illustrate, until the hub opened at Kilkeel in December, customers seeking counter service had to travel around 40 minutes to Newry, Downpatrick or Castlewellan.

I warmly commend Cash Access UK, which is owned and funded by nine major high street banking providers, for opening these hubs in Northern Ireland. I hope that many more will follow. The company rightly acknowledges that up to 6 million adults across the UK still rely on cash in their everyday lives, and it has vowed to work with a growing number of communities to meet their cash and basic banking needs.

I ask the Minister to give an insight, in her closing remarks, into what His Majesty’s Government are doing to ensure that Cash Access UK is receiving the support it requires to provide high-quality banking services, and, more importantly, to ensure that it is able to significantly expand the number of hubs it operates. That particularly applies to Northern Ireland because, although having five banking hubs by the end of this year is incredibly welcome, there is clearly a need for many more if communities, especially rural ones, are not to be left behind.

2.53pm
The Lord Bishop of Norwich

My Lords, I am grateful to the noble Baroness, Lady Tyler of Enfield, for this timely debate. I will speak particularly about rural areas and market towns.

The diocese I serve across Norfolk and Waveney is largely a rural one, but it is one where market towns play a key part in peoples’ lives. Historically places of transaction, they contribute to the warp and weft of community life, especially with their rural hinterland. It is no accident that, in Norfolk, they are fairly evenly spread out across the county, having developed so that livestock could be driven to them for sale and the bonds of extended familial friendship and trust strengthened.

From my internet searching, I estimate that we lost at least 12 bank branches in Norfolk last year. The market town of Wymondham saw the closure of NatWest, HSBC and Barclays within 12 months. The parish church’s treasurer now has a 26-mile round trip to bank the cash collection and cheques. Banks are vital for small rural businesses and charities that deal with cash. Yet, as we have heard, closures are accelerating, and this seems to be a pattern across the UK.

The sad reality is that the withdrawal of banks from market towns has disadvantaged sections of our community, especially those who want to speak to a human and not a robot, those for whom trust is a hard-won necessity, those with sensitive things to discuss and that group of people who are not savvy with the internet or have poor connectivity and so are digitally disfranchised. The negative impact on financial inclusion of closures needs to be borne in mind.

It is good that LINK, the cash machine network, and Cash Access UK have recognised the difficulty of accessing banks in rural communities and market towns and that the whole idea of banking hubs is coming to the fore. As we have heard, there are 31 of them: 21 in England, seven in Scotland, two in Wales and one in County Down in Northern Ireland, mentioned by the noble Lord, Lord Rogan. Their role is, sadly, lagging behind the rate of bank closures. The gaps are there, and I hear that it takes some time to establish a banking hub, so I very much warm to the suggestion from the noble Baroness, Lady Tyler, that the last branch in town should not close until a banking hub is ready to go, for many people are in great need of reasonable access to cash deposit and withdrawal services.
In the Norfolk rural district of Breckland, there have been eight bank closures since 2018, with a further two announced for the coming months. That is a drop of nearly 60% in the number of local banks. In the market town of Watton, no bank remains. The newly opened community banking hub is a welcome addition, following the closure of all the town’s banks in recent years, and its services are proving popular. It is open five days a week, with a counter service operated by the Post Office where customers of all major banks can carry out their regular cash transactions, but it also offers this banking hub, a community banker service where customers can talk to their own bank about more complicated issues. The community bankers work on rotation, with a different bank available on each day of the week. NatWest, HSBC and Barclays each take one day, so, in a sense, this is an invitation for other banks to take up the other two days. The local vicar, Dave Cossey, tells me that the only drawback he has discovered so far is that the banking hub will not accept partially full bags of cash. This is proving to be a challenge for small charities, and it would be great if that blockage could be removed.

In other places where banking is not in people’s DNA—especially, perhaps, in our economically poorest communities—credit unions bring much. Often run by volunteers, they can help people save cash and receive small, affordable loans. I have two questions for the Minister. What is the Government’s strategy for rolling out more banking hubs and how will government support be given to local authorities, to LINK and to Cash Access UK to enable this to happen? Secondly, I think credit unions have a great part to play. What plans do the Government have to aid their development, particularly in rural areas and our market towns?

2.58pm
Lord Hacking (Lab)

My Lords, if I may I would like to say a few words in the gap. It might be thought that the noble Baroness, Lady Tyler of Enfield, and I have been twinning together, because both of us have quite recently been raising this issue of bank closures. I did not know about the work of the noble Baroness until the Minister very kindly told me, in a meeting I had with her about three weeks ago. I should like to make the point that we are acting entirely independently, but worried about the same great issue.

I adopt everything that the noble Baroness, Lady Tyler, has said to us and everything that the noble Lord, Lord Rogan, and the right reverend Prelate the Bishop of Norwich have said. I therefore do not need travel over that ground again. I will just mention one thing. I am in the age group of those particularly affected by bank closures. I am in my mid-80s and therefore I have sympathy—although, luckily, I have been taught about internet banking and so know a few things about that.

I will go straight to an important example—the closure of the NatWest bank in Ryde on the Isle of Wight a few months ago. Ryde is a town of 100,000 or more and for the purposes of getting cash, you now have to walk all the way down the very steep high street to Sainsbury’s, which has a cash machine. However, it is not only people of my age who have difficulty and need personal banking. I will give a solid example. I have a son who is very badly disabled and who until recently was living in Peru. His only source of support is the financial support that the family can give him. My son-in-law is the treasurer of the trust to supply money. It is not easy to convey money in the banking system from here to Peru, and there were occasions when it was not coming through—well, that was the information we were given. I am very well within time; there will be plenty of time for the Minister to reply. Let me just finish this account, because it should be recorded. It was essential for my son-in-law to go personally to the NatWest bank in Ryde to sort out this problem. It would have been so difficult and cumbersome to do it online.
3.02pm
Baroness Kramer (LD)

My Lords, this has been a very short debate, but my goodness it has been a very powerful one—including the example we have just heard from the noble Lord, Lord Hacking. I have great empathy as I have spent hours in NatWest branches just to get an APPG account transferred from one treasurer to another. Let me congratulate my good and noble friend Lady Tyler on obtaining this debate on a crucial issue on which she has campaigned tirelessly.

The access to cash review, chaired by Natalie Ceeney, goes back to March 2019. That is nearly five years ago, and the problems were apparent long before that. Many of us have raised the issues over and again in this House. The Government have made progress, but it is glacial, despite the obvious truth that local banking services are vital to a very wide range of individuals and small businesses. We have, as others have said today, just 31 banking hubs. LINK has recommended over 100, but acknowledges that 1,000 could be needed just to provide cover for medium to large towns, and that is assuming that bank branches stay open in the largest towns and cities.

I am pleased that the FCA, as the new regulator, is conducting a consultation—but my it is narrow and missing many of the key issues. So I thought that I had better talk to some colleagues to see what they were picking up in their local communities. I was stunned when my colleague Jamie Stone, MP for the far north, reported that the Bank of Scotland is closing even its mobile banks, reducing even further the already skeleton access service that is provided. Tom Morrison, my LibDem colleague and the PPC for Cheadle, described the success of the local campaign to get a hub for the south part of Cheadle. However, as yet there is no agreement for a separate second hub that is needed to give access to face-to-face services to thousands of people in the northern part of Cheadle. Lisa Smart, another LibDem colleague and the PPC for Hazel Grove, asked me to thank LINK very clearly for responding to the request for a review of banking services in Bredbury and Woodley but to press for much faster action. A large number of colleagues have asked me both to praise banking hubs but to warn that they should not become an excuse to close branches. That must be reflected in FCA rules.

Therefore, I very much support the proposal of my great noble friend Lady Tyler that the last branch in town should not close until the banking hub has been established. That is the minimum. It must be obvious to every major bank that, if they insist on closing branches—I hope they will be very cautious in doing that—then banking hubs are an efficient way to deliver at least some critical service to the local community on a face-to-face basis. It must be obvious to the banks that local financial services are necessary if we are to grow the kind of economy that banks themselves require if they are to be profitable in the future.

Across the globe, there are a wide range of different models providing banking services, typically face to face, that meet local needs. There are community development banks in the United States, created under the Community Reinvestment Act; the Landesbanken in Germany, which support a local structure; and major credit unions in Ireland, which have a lot of face-to-face presence. Although different, these various models have demonstrably cushioned communities in difficult economic times and provided a resilience not available in the UK. I do not understand why our UK banks have not, in their own interests, seized on the banking hub model and participated with enthusiasm. Perhaps the Minister could tell us. Are they just uninterested, quietly hostile or what? They are the reason we have only 31.

Recently, I used the opportunity of Oral Questions to ask the Minister why bank participation in a banking hub is voluntary, even when a request for a banking hub has been shown by LINK to meet the qualifying criteria. She told me that putting the scheme on a statutory basis has removed what is effectively the bank veto that I was referring to. But, as I look in more detail, and as my noble friend Lady Tyler made clear, this statutory basis applies only to access to cash; banks need not co-operate in providing other services. But that seriously undermines this whole scheme. Communities desperately need access to cash but also to saving and investment products, to mortgages and business loans, to guidance in resolving system problems—indeed, a wide range of services. That simply comes in. As well as reinforcing my noble friend’s proposal on the last bank in town, I want to ask the Minister: will she now bring forward legislation that will take away the voluntary participation in providing the broader range of banking services? Will she say to banks, “You must participate in a banking hub where the criteria have been met showing that a banking hub is vital for this local community”?

3.07pm
Lord Livermore (Lab)

My Lords, I join others in congratulating the noble Baroness, Lady Tyler of Enfield, on securing this debate, and for her excellent opening speech, a great deal of which I agreed with.

As many noble Lords have said, this is indeed a very timely debate. Around half of all bank branches in the UK have closed since 2015. That is almost 6,000 banks closing their doors, with some regions such as the south-west or Yorkshire losing nearly two-thirds of their branches. This has cut off countless people from essential services and has been a major factor in the decline of Britain’s high streets.

It is of course welcome that, after many years of delay, the Financial Services and Markets Act finally introduced protections for access to cash, but far too little has been done to protect essential face-to-face banking services, which the most vulnerable in our society depend on for financial advice and support.

Instead, the Government have relied solely on a voluntary arrangement with the banks, which has managed to deliver just 30 out of a promised 70 banking hubs. As a result, 33 towns across the UK are now left without a single bank, despite all of them being promised a banking hub over six months ago. Even if delivered, the promise of 70 hubs under the voluntary arrangement is completely inadequate to meet the scale of the problem.

In the last 24 months alone, an additional 320 towns have seen their last remaining bank branch close, leaving more and more people and small businesses in banking deserts, without any options to bank locally. My noble friend Lord Berkeley gave me just one example from the Isles of Scilly, where he lives. The last bank there closed 10 years ago. The population of 2,500 people have to go to Penzance to visit a bank, at a cost of a £160 return ferry journey, just to use essential banking services.

Cases such as this have led the Labour Party to commit to a national strategy on banking hubs to quickly deliver at least 350 hubs on Britain’s high streets. As part of that commitment, areas that currently have no high street banks would be first in the queue. We will work with the banks and give the FCA the powers it needs to stop people being left in these banking deserts, guaranteeing communities access to face-to-face banking services.

To be clear, this does not mean that we believe banks should be prevented from closing branches that are no longer needed—far from it. In fact, where possible, access to face-to-face services is in many cases better delivered through a shared banking hub, whether through the Post Office or other models of community provision. Doing so can lead to significant cost savings for banks too. FCA data shows that, whereas a bank branch costs over £600,000 a year to run, that cost is less than £200,000 for a banking hub—a figure which itself will be divided among the participating banks according to local market share.

It is, of course, also inevitable that payment and banking systems will continue to innovate. This is a good thing—online banking is a far more convenient way for many people to manage their finances—but we must ensure this digital revolution does not further deepen financial exclusion, which means we must protect face-to-face services while also putting in place a proper strategy for financial and digital inclusion. Here, again, banking hubs can play a vital role. These spaces have the potential to tackle digital exclusion through their dedicated staff, who can teach people how to bank online and provide internet access for those without it, as well as to promote financial inclusion by providing access to financial advice for people who are struggling.

Labour’s banking hub guarantee will also be a key part of our plan to reverse the decline of Britain’s high streets by ensuring that working people and local businesses have the banking services they need on their high streets. The community access to cash pilots demonstrated that shared banking hubs can be a major boost to local businesses in communities where they have lost every single one of their bank branches. In the areas that trialled banking hubs, 34% of businesses reported they could reduce the amount of time they needed to close their shop in order to carry out their banking; 37% of businesses reported that footfall had increased in their shop; and 51% of consumers reported shopping locally more as a result of the pilot services. This rose to 69% among respondents who considered themselves to be financially vulnerable.

The national rollout of banking hubs can play a vital role in providing much-needed face-to-face banking services. It could help tackle financial exclusion and could be worth billions of pounds to small businesses and high streets across the country. So I end by asking the Minister two questions. Will she commit to giving the Financial Conduct Authority the power to regulate and protect essential in-person banking services for communities, comparable to the regulatory powers it already has to maintain access to cash? Will the Government match Labour’s plan to work with the banks and the Financial Conduct Authority to rapidly expedite the rollout of at least 350 banking hubs in the communities with the highest need for essential in-person banking services? If we prioritise it properly, a national network of banking hubs could tackle ghost high streets and ensure that every community has access to the high street banking services they need.

3.13pm
The Parliamentary Secretary, HM Treasury (Baroness Vere of Norbiton) (Con)

My Lords, I very much appreciate the opportunity to return to the topic of access to cash and to face-to-face banking facilities. I really do appreciate the strength of feeling across the Chamber on this topic and am very grateful to the noble Baroness, Lady Tyler, for securing today’s short debate.

The Government recognise that banks and building societies occupy a privileged place in society and are essential to enabling people to manage their money on a day-to-day basis. But it is undeniably the case that the nature of banking is shifting. First, there was a move to telephone banking; it took many of us quite a long time to get used to it, but you can now do pretty much anything that you could do face to face on telephone banking. There has subsequently been an ever-increasing number of customers opting for the convenience of online and mobile access. Some noble Lords have explained that they are of a vintage such that they feel that that is not for them. I accept that, but my mother, for example, is of the same vintage, and has embraced it very readily, so there are different people who will take a different view of that. Of course, telephone banking remains available.

If one looks at the hard facts here, in May 2022 only one-third of adults had been to any branch at all to undertake banking activities face to face in the previous 12 months.

Lord Hacking (Lab)

That is because they are all closed.

Baroness Vere of Norbiton (Con)

That is a significant drop from 2017, just six years ago, when almost two-thirds of UK adults did. Is the noble Lord suggesting that these individuals therefore did not transact at all, or were they able to do it by other means, and have got used to the other means of banking and find them more convenient? Causation and correlation may not quite apply in this.

It is also true that nine in 10 adults bank online or use a mobile app. We cannot reverse the changes in the market and in consumer behaviour; nor can we determine firms’ commercial strategies in response to the changes, which are being led by consumers. Maintaining flexibility to respond to changes in the market is key to what makes the UK’s financial services sector one of the most competitive, innovative and productive in the world.

Decisions on opening and closing branches are taken by the management team of each bank on a commercial basis. The Government do not intervene in these; nor do they stipulate locations for the bank branch network as a whole or for individual banks. The noble Lord, Lord Livermore, mentioned that certain banking initiatives have subsequently closed; it is worth asking oneself why. Was it that actually they were not used?

The Government recognise that access to in-person banking services, particularly cash, remains important to many people across the country. As such, the Government believe that all customers, wherever they live, should have appropriate access to banking and cash services, and that the impact of branch closures should be mitigated where possible. On access to cash in particular, it is worth noting that over 97% of the urban population are within one mile of a free cash access point, and over 98% of the rural population are within three miles of a free cash access point.

The Government have taken action to preserve access to cash, and we legislated through the Financial Services and Markets Act 2023 to protect access to cash for individuals and businesses. This places a responsibility on the FCA to ensure reasonable provision of cash access services. Importantly, in relation to personal current accounts, the FCA is required to seek to ensure reasonable provision of free cash access services. The FCA is currently consulting on its proposed regulatory regime. Under the proposals, banks and building societies designated by the Treasury will be required to assess and fill gaps, or potential gaps, in cash access provision that significantly impact consumers and businesses. Following the consultation, the FCA expects to finalise its rules in the second half of this year.

More broadly, the Government recognise the importance of in-person banking for some people. While decisions on individual branch closures are a commercial issue for firms, which the Government do not intervene in, this Government absolutely support industry-led initiatives to protect access to in-person banking services, such as shared banking hubs, agreements with the Post Office—which I feel are very important—and community outreach programmes, where they work, such as in community centres and libraries.

I highlight the services offered by the Post Office. People can use their local post office under the Post Office banking framework agreement to access everyday banking services, thanks to this commercial agreement. This means that 99% of personal banking customers and 95% of business banking customers can do their banking at the 11,500 Post Office branches right across the country. The noble Lord, Lord Livermore, has a grand plan for some sort of nationalised shared banking hub network. The towns that he is thinking about may not have a branch, but they have a post office, or perhaps there are towns that he would like to write to me about that have neither a branch nor a post office because clearly that is something we could look at. I think the Post Office’s intervention and close working with the industry are very helpful.

Of course, banking hubs can go more broadly than the services offered by the Post Office. Banking hubs are a very exciting development. They are quite a new development. They help businesses and people withdraw cash, make deposits, pay in cheques and check their balances, but they may also have a community banker who can help people with more complicated matters that require specialist knowledge or privacy or when somebody wants to have a face-to-face meeting with a banker. These hubs are deployed in response to a bank announcing a branch closure or a community making a cash access assessment request. Where LINK has assessed a community’s cash access needs and concluded that a banking hub is the most appropriate option, that is done as quickly as possible.

I note the comments by the noble Baroness, Lady Tyler, which were echoed by many others noble Lords, including the right reverend Prelate the Bishop of Norwich. I reassure her that to ensure that there is no gap in the provision of services, the industry has committed that when a hub is recommended, a branch will not be closed until a hub is open. I think that will be welcome news to the House today.

Cash Access UK, the provider of banking hubs, has opened more than 30 banking hubs so far and I expect this to rise to about 50 by Easter. I agree that the speed of the rollout has potentially been too slow, but this is a relatively new intervention and the processes are now in place. I echo the comments of the noble Lord, Lord Rogan, in welcoming the work of Cash Access UK. We support it and are in regular contact with it. I am pleased to report that it tells us that it expects the pace of delivery of banking hubs to continue to improve over this year.

The noble Baroness, Lady Tyler, asked for a target for the total number of banking hubs, and a timeline. Indeed, the noble Lord, Lord Livermore, gave us a target of 350—I have no idea where that came from. It depends on local need and the shape and scope of the banking facilities available over time. Imagine that a new bank were to come along and suddenly open a branch on a high street that already contained a banking hub. If we had a target that there had to be banking hub there, what would we do? Would we close it? It does not make sense. We need the flexibility to work with the network and the system. Provided that we get those banking hubs in place as quickly as possible, I think that is by far the better way to deal with the issue that we face.

There is guidance which provides certainty around the provision of the relevant services. The FCA, the independent regulator, provides clear and unambiguous guidance to banks and building societies to ensure that they carefully consider the impact of planned closures on their customers. It is not just about access to cash; they must consider the impact of the lack of services or the change of channel of services on all their customers. The FCA is taking an assertive approach to encourage firms to follow its guidance. When banks and building societies are closing branches, the regulator expects them to put in place appropriate alternatives where this is reasonable. Where firms fall short of expectations, the FCA can and will ask for closures to be paused or for other options to be put in place.

The FCA consumer duty is also now in effect. It sets higher and clearer standards for customer protection across financial services and requires firms to put their customers’ needs first. The consumer duty also requires that firms deliver “good outcomes” for customers. That means that banks owe their customers a higher and clearer standard of care, and must ensure that customers receive support so that they do not face barriers in accessing their accounts.

I note the comments about charities. On the point made by the noble Baroness, Lady Kramer, about transferring an account from one holder to another for an APPG, those are the sorts of things that I am really concerned about when it comes to branch closures. All noble Lords will be aware that getting a signature on a piece of paper can sometimes be very tiresome, and I encourage all banks to try to sort that out. However, UK Finance is also talking to charities to make sure that they are in contact with banks, because there are a number of things that they can access.

I am out of time. I was going to talk about not only connectivity but digital inclusion, which is important because banks themselves are taking big steps to encourage their customers to become more digitally savvy. Indeed, they are helping those who may not necessarily have the wherewithal to afford the sorts of internet services that one might need. I will write with further information.

I will also write to the right reverend Prelate, and copy in all noble Lords, about credit unions—they are quite interesting—and whether there is a gap in the market for hyperlocal banks that serve a community. I have just come back from the US; that is what they have there, and it is a very interesting model.