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.