(7 months, 4 weeks ago)
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Simon Jupp (East Devon) (Con)
I am delighted to have secured this important Adjournment debate on access to banking services and banking hubs in Devon. I welcome the Minister and colleagues to the debate.
Take a quick stroll down your nearest high street, Mr Deputy Speaker, and you will notice that there are fewer bank branches than there were in years gone by—far fewer. In 1992 there were 19,000 bank and building society branches in the UK. In 2022 the number of bank and building society branches had fallen from 19,000 to 8,000. That decline has not happened more quickly on any particular Government’s watch: the fall has been consistent and steady over the past 30 years. However, we have reached a tipping point; bank branches are getting scarce.
We notice when bank branches are gone altogether from our high streets. People cannot deposit cash or pay in cheques; businesses and charities cannot pop to the branch to refill their tills or bank their takings at the end of the day; and we no longer have friendly faces to talk to for financial advice. When bank branches are gone, people have to travel miles to apply for a loan or to arrange third-party access to start bereavement proceedings, for example. People tell me that when those branches are gone, managing their money becomes more difficult, if not impossible. People in my constituency travel to cities and towns such as Exeter or Honiton for their nearest branch. Every time a bank decides to shut its high street branch, my postbag fills up. I share those people’s frustration—I get it.
Jim Shannon (Strangford) (DUP)
I commend the hon. Member for securing the debate on this massive issue. Does he agree that banks’ abdication of their responsibilities to rural communities, which often have the worst transport, infrastructure and broadband connections, cannot be paved over with a users’ guide to online banking? At the very least, a hub that is accessible throughout the day and in the evening must be the minimum standard of service that any national bank must be required to provide for its customers.
Simon Jupp
The hon. Gentleman is absolutely right. I personally would benefit from a “how to bank online” guide, because it can be quite confusing, even for someone who is relatively technical. I thank him for his point.
It is not enough to say that bank branch closures are commercial decisions. Yes, the Government cannot intervene, and nor can I as an MP stop bank branches from closing, as much as I try. But we have reached a tipping point where enough is enough. Banks must provide core services to loyal customers on our high streets and stop washing their hands of their customers’ needs.
The banks claim that their branches on our high streets are increasingly outdated: they say that more customers are moving online and going cashless. That is broadly true, but it is not an excuse simply to pull up sticks and disappear. In fact, I believe that bank branch closures across the UK are forcing people to change their habits, but people still need access to cash and face-to-face banking services—the demand is definitely still there. To give a couple of statistics, 27% of over-65s and 58% of over-85s rely on face-to-face banking. Some among the older generation are not technophobes. In fact, they may have valid reasons for not wanting to do online banking. According to research by Age UK, fear of being defrauded and a lack of IT skills are common reasons why many people prefer face-to-face banking.
If the need for face-to-face banking is still there, what is the solution? That brings me to the second part of my speech.
Mrs Pauline Latham (Mid Derbyshire) (Con)
My constituency has a banking hub in Belper, which has become a lifeline for businesses on the high street, particularly small businesses, because they can access cash and pay cash in. I encourage my hon. Friend to keep campaigning for a banking hub, because they help every section of society: older people, younger people and businesses. That banking hub has rejuvenated the high street in Belper.
Simon Jupp
I thank my hon. Friend for her intervention. It is almost as if she knew what I was about to say, because I was about to move on to the topic of banking hubs, which are a relatively new concept. I think of them as shared banking spaces: they look a bit like a traditional bank branch, but unlike a traditional branch, those hubs are available to everyone. They offer counter services: customers from any bank can withdraw and deposit cash, collect change, deposit cheques, pay bills and make balance inquiries. They also offer private spaces for specific banks, where customers can speak to someone from their own bank or building society about more complex issues such as mortgages, loans and pensions. That is not really something that people want to do online.
Banking hubs are an industry-led solution to the demise of physical branches, but the Government have been clear that the delivery of hubs must speed up. They have done important work to legislate to protect access to cash, not least through the Financial Services and Markets Act 2023. I look forward to hearing the Minister’s remarks in this debate and hope to hear about the progress being made in rolling out more banking hubs across the country. I know that he has had discussions with UK high street banks, and has also held roundtables with industry and MPs about banking hubs.
As East Devon’s MP, I have been holding meetings locally to see how we can set up banking hubs in the constituency. Last year I launched a local campaign. Lloyds in Sidmouth, the last bank in town, was going to shut its doors. That is where I live, and local residents and I wanted to send a clear message to the banks that they should staff a banking hub in Sidmouth. Hundreds of people got in touch through my survey and the results were quite startling: 81% of residents who responded said they had visited a bank branch in the past six months, and 96% said they wanted staff from their own bank in the hub. On the question in my survey:
“What is the most common way that you access banking services”,
46% said:
“In branch or in person”,
while 52% said “Online” and only 2% said “Telephone”. My survey showed a clear demand for face-to-face banking, and the need for a banking hub in Sidmouth.
Here is what some local residents told me when Lloyds announced it was closing its branch in Sidmouth. Mary said:
“We wonder why it is Sidmouth, with all the holiday crowds, folk festivals, regatta and jazz festivals that the last bank is set to close. There seems to be no logic. Do these decision makers have a rusty old pin they use to decide which banks stay and which goes?”
Susan told me:
“I am very upset to discover Lloyds bank is closing. I wonder what customers are supposed to do when they need paperwork either for power of attorney or closure of accounts after a death?”
Pauline told me:
“I very nearly got scammed. I am not technology minded and do not bank online. I received a very convincing text message which resulted in my going to my bank to make a payment. If it wasn’t for the lady I spoke to in the bank I would have had my account wiped clean. She was very much on the ball, so I was saved. This shows the importance of having a bank in Sidmouth.”
Local residents such as Mary, Susan and Pauline were delighted when Sidmouth’s banking hub opened its doors last month. It has been very popular, but is it perfect? No—although I would like to pay tribute to the staff, who are fantastic—because it is not yet quite what the town needs, because it needs a cashpoint. It needs to have a 24/7 ATM available outside, with a printer so that residents can get mini-statements, as well as a trial of Saturday opening hours if at all possible. However, I want to thank the team at Cash Access UK and the building contractors for getting the hub up and running so successfully before Lloyds closed its doors. I was also pleased to visit Axminster’s banking hub when it opened. I heard feedback from local residents and businesses about how important it is for that town. More banking hubs such as the ones in Sidmouth and Axminster are needed in Devon, and I want to put that firmly on the record in today’s debate.
I am currently working with local communities to try to get banking hubs in towns such as Exmouth, Budleigh Salterton and Ottery St Mary. Exmouth, the largest town in Devon, will need a banking hub sooner rather than later, and I have already made the case for one. Halifax’s branch in the town will close this summer, which will leave just three banks remaining in Exmouth.
The case for a banking hub in Budleigh Salterton is also strong. It has been without a high street bank due to closures in recent years. The last bank in town, Lloyds, closed in January 2019. The town’s population is significantly older than the national average. Local residents and businesses have only the post office and the Co-op to access over-the-counter banking services. I have seen the queues, and it is not great, although it is a small shop and the staff work incredibly hard. That is why I have made a formal request for a banking hub, alongside a local councillor, Henry Riddell.
I know the Government want the delivery of banking hubs to be sped up, and I hope that Exmouth, Budleigh Salterton and Ottery St Mary will be in line for banking hubs too. I would cite these examples as to where a problem lies. I believe the criteria for whether an area should get a banking hub must be relaxed, because the bar is far too high at the moment. Generally, in order to get a banking hub a town needs 7,000 people within 1 km of the centre and at least 70 retailers. It also needs there to be no banks at all—in other words, the last bank in town must be closing or already have closed. Too often it takes the last bank in town to shut before the industry gets its act together and opens a banking hub.
On this point, Exmouth will not get a banking hub under the current criteria until 2028. Nationwide told me when I visited last week that it will keep its Rolle Street branch open until at least 2028. I of course welcome that commitment by Nationwide, which is playing fair by the high streets, but that commitment in effect means that a banking hub will not open in Exmouth while the branch remains, which makes no sense to me. We have to consider the size of Exmouth, and we also have to consider the number of banks the town used to have. We do need to look again at the criteria and to lower the bar.
I recently co-signed a letter from my hon. Friend the Member for Hertford and Stortford (Julie Marson) to the Financial Conduct Authority to unlock more banking hubs. The FCA will decide on new rules in the third quarter of this year, and I will be watching that like a hawk. This could be an important turning point, so that even more banking hubs can open. As I have said, more banking hubs such as those in Sidmouth and Axminster are badly needed in my part of Devon. People should be able to access banking services on our high streets.
I am delighted to have secured today’s debate and look forward to hearing the Minister’s remarks.
The Economic Secretary to the Treasury (Bim Afolami)
It is an absolute pleasure to respond to this debate, and I thank my hon. Friend the Member for East Devon (Simon Jupp) for securing it.
We know that our colleagues in this place all work hard for their constituents, but some go the extra mile. I would say that on this subject, like so many others, my hon. Friend is an exemplar of what can be seen in British politics and in this Parliament. His work on securing access to banking services in his constituency is second to none. I appreciate the strength of feeling across the Chamber on this topic. I share the concerns of many Members in light of the more than 600 closure announcements we have seen in the past year. Banks and building societies are essential in people being able to manage their money on a day-to-day basis, and they hold a privileged and important place in our society. As such, firms must ensure that all customers, wherever they live, have appropriate access to banking and cash services.
We need to be grown up about this issue. We all recognise, as my hon. Friend made clear in his remarks, that the world of banking has changed greatly in recent years. Reflecting that shift, customers have increasingly moved towards online and mobile access. That shift is apparent across many areas of the economy and society, not just in banking. Recent Financial Conduct Authority data shows that only 21% of British adults still regularly use a bank branch. In contrast, almost nine in 10 adults banked online or used a mobile app.
It is right that firms continue to innovate in response to changing customer habits and ensure that customers across the UK benefit from the latest developments in technology, but those changes in technology—this is a fundamental point, and I believe my hon. Friend will share my view—do not mean that access to in-person banking and cash services are no longer required. They remain vitally important to many people up and down the country in our constituencies. In times of need, or when more personalised support and services are required, such as in the examples that my hon. Friend mentioned, speaking to a real person face to face can be essential. More broadly, the wider societal benefits to our constituencies, our high streets and our market towns of bank branches are critically important.
In the light of those things, the Government have taken decisive action over recent years to ensure that access to cash is protected through the Financial Services and Markets Act 2023. It places a responsibility on the FCA to seek to ensure reasonable provision of cash withdrawal and deposit facilities, including free services for personal current accounts. Following the passage of that Act, the Government published a policy statement setting out our policies on access to cash. The FCA must have regard to that policy statement as part of its regulatory approach. The statement set out that people and businesses should be no further than 3 miles from a free cash access point.
As my hon. Friend mentioned, the FCA has recently held a consultation on its proposed regulatory regime in this area. Under the proposals, banks and building societies that are designated by the Government will be required to assess and fill gaps or potential gaps in cash access provision that significantly impact consumers and businesses.
As well as access to cash, the FCA has guidance on bank branch closures. While decisions on individual closures are rightly a commercial issue for firms—we do not want Government Ministers deciding where bank branches go, tempted and fascinated as I would be by that process—we expect firms to adhere to the FCA guidance. That guidance is clear that banks and building societies must ensure that they carefully consider the impact of planned closures on their customers.
Where firms fall short of those expectations, the FCA has the power to ask for closures to be paused or for other options to be put in place, and it will do so. It is important to make the point that the industry has made great strides to provide a range of initiatives through alternatives such as agreements with the post office or community outreach programmes in locations such as community centres, libraries and village halls. Shared banking hubs are, as we have heard, another exciting and popular innovation. Banking hubs are a clear example of pioneering, industry-led innovation to protect access in a changing landscape.
As my hon. Friend the Member for Mid Derbyshire (Mrs Latham) made clear, banking hubs can be a lifeline to communities. I am pleased that the Sidmouth hub has been opened, where my hon. Friend the Member for East Devon had the privilege of cutting the ribbon—or whatever they had him cut—but it is important that the House, and indeed everybody, knows that banking hubs can be a modern 21st century way to ensure access to cash and banking services. The Government strongly support this innovation.
These hubs help people and businesses withdraw and deposit cash, pay in cheques, and check their balance over the post office counter, and also provide a community banker who can help people with wider banking services, from making a transfer to providing support for fraud and scam victims. My hon. Friend mentioned victims in his constituency who he has been working with.
Hubs are deployed by Cash Access UK in response to a Link assessment of the community’s cash needs. To ensure there is no gap in the provision of services, the industry has committed that if a hub is recommended, the branch it replaces will not be closed for up to 12 months until that hub is open, and if there is a delay beyond that, a temporary hub will be put in place. To date, over 120 hubs have been announced across the country and 47 are open. This is a welcome programme, and it is a priority to me that the industry continues to deliver on this but speeds it up.
UK Finance, the trade body representing the industry, has recently committed to a total of 225 hubs to be opened in the next 18 months. Like my hon. Friend and many in the House, I will be watching and holding it to account, and making sure that those hubs open as quickly as possible.
Miss Sarah Dines (Derbyshire Dales) (Con)
As the Minister knows, I represent Derbyshire Dales, where we recently had the closure of the last bank, the National Westminster bank, in Bakewell. That was the last bank in the Peak district. My concern is that the criteria for hubs exclude us, because Bakewell is too small: it has only 3,000 to 4,000 people and under the present criteria there have to be 7,000. What might work in Belper or another part of a district or county like Derbyshire, or indeed Devon, might not work elsewhere, meaning that people will be left behind. Will the Government look with the FCA at whether the criteria should be changed to take into account areas that surround a smaller town, where that smaller town might still be vibrant but not big enough on its own to qualify for a hub? What is the future in this area?
Bim Afolami
I thank my hon. Friend for her point and I should not have left her out when talking about the committed Members of Parliament who work on this area. I pay tribute to her for the number of times she has questioned me, badgered me and advocated for her community and constituents on this subject, and today is another good example. If she waits a few minutes, I will address her specific points directly.
It is important that hubs provide a good service to customers and the industry evolves its offer as it learns from the roll-out of the 47 hubs that are already open. Following recent discussions I have held with the UK high street banks and my roundtable with industry representatives and MPs last month, I am pleased that the industry has agreed to improve the services in hubs to ensure they are a genuine alternative to bank branches. My hon. Friend the Member for East Devon referred to some improvements he would like to see in his constituency.
Participating high street banks have committed to a range of improvements to the banking services provided in hubs, such as: first, having an agreed consistent and improved level of service provided by all firms; secondly, ensuring that personal customers do not need to bring their own devices to access services; and, thirdly, trialling various new services such as a customer liaison service and Saturday openings. Those improvements will make a big difference to participation and, indeed, to how welcome banking hubs are. I am grateful for the constructive and positive approach that I have seen from industry in its engagement with His Majesty’s Treasury, recognising the needs of its customers. I have written to all MPs and to the Chair of the Treasury Committee on the package.
I turn to the point made by my hon. Friend the Member for Derbyshire Dales (Miss Dines). Firms have provided me with reassurance that they will continue to revisit the criteria for locations to be eligible for a hub to ensure that they reflect customer needs, and that they will do so in particular following the publication of the FCA’s response to its recent access to cash consultation. That is important, because rural areas and smaller places such as Bakewell sometimes lose out.
I know that the industry will be watching the debate and will take what I am saying seriously. Let us revisit the criteria in a sensible way to ensure that they take account of areas that need banking hub services but are not currently accommodated. That is very important, and I will work with the industry to see what it can do to deliver on what I have just said from the Dispatch Box. I believe that the measures set out in the package mark a significant step forward from industry in ensuring that customer needs are being met, but I reassure the House that I will continue to monitor the roll-out of banking hubs closely.
I am grateful that we have had another chance to discuss this important topic. While branch closures are a commercial decision—and it is right that they are—I strongly believe that all customers, wherever they live and whatever their age, should have access that is appropriate for them to banking and cash services. I am grateful for the engagement I have had from the sector and the FCA on this important issue. I thank again my hon. Friend the Member for East Devon for bringing the debate to the Chamber, and I thank my hon. Friends the Members for Mid Derbyshire and for Derbyshire Dales—Derbyshire is the theme there—for their contributions.
Question put and agreed to.