Branch closures consultation.10 Aug 2021 12:31
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UK banks face block on high street branch closures
FCA examines rules that would ensure consumers and businesses have continuing access to cash
Thousands of high street bank branches and ATMs have been closed in recent years as lenders have sought to cut costs © Medicimage/Alamy
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Nicholas Megaw in London AUGUST 10 2021
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The chief UK financial regulator is considering new rules that would allow it to block banks from closing high street branches to help ensure consumers and businesses can still use cash, according to people briefed on the watchdog’s deliberations.
The Treasury said in a consultation last month that it planned to use legislation to give broad powers to the Financial Conduct Authority to guarantee “reasonable” public access to cash facilities, adding the FCA would have “discretion” to set out how standards should be met.
Senior regulators have since told lenders and industry groups that they believe in-person banking services should remain important alongside ATMs and other initiatives such as making cashback more widely available, said two people involved in the discussions.
One person close to the FCA said that the Treasury consultation did not make clear definitions but that the watchdog was “pretty clear where it’s going”. “Powers will allow them to say: ‘If there aren’t good enough face-to-face services in place, we can block [branch closures]’.”
The FCA declined to comment.
Banks have closed thousands of branches and ATMs in recent years in an effort to cut costs.
Lenders said the closures reflected the transition from in-person banking and widespread cash usage to online services and digital payments, but the changes have raised fears that millions of older and more vulnerable customers could be left behind.
The prospect of being forced by the FCA to keep branches open is likely to put pressure on banks to support initiatives to develop shared infrastructure. This would allow them to cut some costs without leaving communities without a single branch.
Big banks are currently funding pilot schemes to test different ways of improving cash access, including shared hubs which are managed by the Post Office but offer services from multiple lenders.
UK Finance, the industry lobby group, said: “We understand the importance of cash for many people and the banking and finance sector has publicly c
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