Asked by
To ask His Majesty’s Government how many banking hubs have been
established in response to bank branch closures since January
2022, and whether they are taking steps to facilitate the
establishment of a national network of banking hubs.
The Parliamentary Secretary, HM Treasury () (Con)
My Lords, since January 2022, the financial services sector has
opened 23 banking hubs, with another 27 hubs expected by Easter
next year. Following government legislation, last week the
Financial Conduct Authority published proposals for a new
regulatory regime to protect access to cash. This includes
proposals that seek to ensure a timely delivery of services that
meet the needs of communities.
(LD)
I thank the Minister for her Answer and welcome the steps being
taken to safeguard free access to cash. Does the Minister agree
that many people, particularly older people and those with
disabilities, need access to physical banking services which go
much further than access to cash? It is about having a real
person to talk to. Given that banks and building societies have
closed over 6,000 branches since 2015, does the Minister also
agree that the rollout of banking hubs has been painfully slow,
leaving many communities to become banking deserts? The current
plans are totally inadequate for creating a much-needed national
network of banking hubs, which some have estimated would require
between 800 and 1,000 such hubs.
(Con)
There were many questions there and perhaps I will focus on the
last one, which is where the FCA consultation comes to the fore.
The proposals set out by the FCA are very detailed and
potentially go much further than the voluntary initiatives of
banking hubs that have so far been undertaken by the sector.
Obviously, that consultation remains open until 8 February, and
we will be looking for not only banks to respond but
representatives of the vulnerable groups the noble Baroness
describes, so that we can get a full view of what the proposals
should be.
(Non-Afl)
My Lords, I commend the establishment of banking hubs across the
United Kingdom as an alternative to the closure of mainstream
banks. Can the Minister set out the criteria for such banking
hubs being initiated? Just one has been established in Northern
Ireland. Recently, the Ulster Bank decided to close a range of
banks across Northern Ireland, leaving many rural areas without
physical banking facilities. What are the criteria for the
establishment of banking hubs, because there is a need for one in
Lisnaskea, south-east Fermanagh?
(Con)
I recognise what the noble Baroness is saying. The criteria
currently used to assess whether a community needs a banking hub
are set out in consultation with the financial services sector;
that is part of the current voluntary arrangement. I point the
noble Baroness to the FCA consultation, because the criteria to
be set out going forward are far more detailed and focus on the
needs of not only local communities but SMEs. The consultation
will also look at seasonal fluctuations in the need for cash
access and the ability of SMEs to get coins and notes. The FCA is
going further than the current voluntary arrangements.
(Lab)
As with rural bus services, the loss of banking facilities bears
most heavily on the elderly. Does the Minister agree with the
principle that the last facility in a community should not be
lost until a hub is established?
(Con)
I agree with that in principle, and that is what the FCA set out
in its consultation. If the assessment is that a community needs
services, it will be beholden upon the designated firms—the
banks—to put an alternative service in place before the last bank
is closed, or alternative services will need to be put in place
within three months if the existing service had somehow
disappeared many months or years beforehand and an assessment was
made that the community was lacking access to cash.
(CB)
Perhaps I may add to what other noble Lords said about the
urgency of this. In the part of Devon where I live, it is a
desert. In Fleet Street, there used to be two Barclays branches
between the law courts and the Old Bailey and now—can you believe
it?—there is none; and yet, another set of courts is about to be
built. Can the noble Baroness inject some urgency into this?
(Con)
That is why the Government decided that it was time to legislate.
We felt that the voluntary initiative was not coming along fast
enough, and we legislated in the Financial Services and Markets
Act in the summer. The FCA, the key independent regulator, has
brought forward its consultation in short order.
(Con)
My Lords, we know that banking hubs should provide the
face-to-face communication which is so valuable and important for
those who need extra help and support with their finances and may
not be equipped with adequate financial understanding and skills.
As we know, not all young people are leaving school having had an
adequate financial education. Can the Minister assure us that
there will be a person at each of these hubs to provide much
needed and valuable face-to-face communication?
(Con)
In many circumstances banking hubs have a private room where
community bankers can meet customers to discuss their financial
requirements. Cash Access UK, the partnership that sets up
banking hubs, publishes a list showing where community bankers
are available. I should also point my noble friend to other
interventions that some banks are using, such as mobile banking
services, pods and pop-ups. There are a lot of ways to have
face-to-face contact with consumers.
(Lab)
My Lords, the latest figures from the British Retail Consortium
show that shopping with cash has risen for the first time in a
decade, as household budgets are increasingly stretched. At the
same time, almost half of bank branches have closed, while the
rollout of banking hubs has been much delayed. Will the Minister
agree to match the Labour Party’s commitment to work with banks
and, where necessary, bring in additional powers for the FCA to
guarantee face-to-face banking services, beginning by
prioritising areas that currently have no high street banks?
(Con)
I think what the noble Lord has just set out is exactly what the
Government are doing. The FCA consultation goes into an awful lot
of detail on the criteria that will need to be met for banking
services to continue. We accept that, while the use of cash has
declined over time, it has possibly reached a plateau. But I
reassure noble Lords that, for example, 97% of the urban
population is within 1 mile of a free-to-use cash access
point.
(LD)
My Lords, surely the Minister has hit the nail on the head: the
weakness of the current banking hub system is its voluntary
character. That could be corrected with a relatively simple
statutory instrument so that, when a local community applies to
Link and is shown to meet the criteria, a banking hub is
guaranteed and it does not suffer what happens today—delay or
refusal by the banks.
(Con)
I disagree with the noble Baroness. I would not want to put the
current arrangements on a statutory footing at all, because they
could be better. That is exactly what we are doing: we are
looking at the existing voluntary arrangements and saying that we
need a regulatory footing, not for where we are now but for where
we should be in future. That is why the FCA consultation is so
important. But this also builds on FCA guidance, which is already
out there and which banks already follow.
(CB)
Is there a case for working much more closely with the Post
Office, which is doing an enormous amount of work in backing up
the lack of banking in certain areas? We are working with the
Post Office, and its commitment to filling the gap left by banks
is incredible.
(Con)
The noble Lord is absolutely right. The Post Office banking
framework has been in place since 2017, and we recognise the
really important role post offices can play for people and for
small and medium-sized enterprises. The current arrangements are
in place until December 2025, when they will of course be looked
at again, but we recognise that the more than 11,000 post offices
offer a very helpful route to get cash and other services.
The Lord
My Lords, I thank the Minister for that last answer. However, in
the north-east, only one banking hub has been opened this year
and there is a diminishing number of post offices, so it is quite
hard to see how the post office network is actually helping in
the north-east.
(Con)
I point the right reverend Prelate to figures released by the FCA
last week. We know that geographic coverage of the cash access
network remains comprehensive, despite some branch closures over
a period of time. Of course, we are keeping this under review,
which is why we await the response to the FCA consultation. We
expect any proposals to be in place by summer next year.
