High Street Banks and Banking Hubs

Baroness Fookes Excerpts

Thursday 25th January 2024 Lords Chamber

[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?

Financial Services and Markets Bill

Baroness Fookes Excerpts

Committee stage
Tuesday 7th March 2023 Grand Committee

[Baroness Meacher (CB)]

I think we had got on to Amendment 199. Is that correct?

[The Deputy Chairman of Committees (Baroness Fookes) (Con)]

Amendment 168 is the lead amendment; the other amendments are grouped with it. People can debate any amendment within the group.

[Baroness Meacher (CB)]

Amendment 168 is the lead amendment; that is absolutely right. I think we had got on to Amendment 199. Is that correct, Minister? Are you happy with that?

[Baroness Meacher (CB)]

One or two people had talked to Amendment 199 and I was just about to do the same. Is that okay?

[The Deputy Chairman of Committees (Baroness Fookes) (Con)]

It is in order to speak to any amendments in the group.

[Baroness Meacher (CB)]

I apologise; I am completely confused.

The due diligence system reintroduced for companies under Schedule 17 to the Environment Act is world-leading in its intentions. However, we have to finish the job to end our financing of deforestation. The GRI Taskforce has been unequivocal in its advice that financial actors should conduct deforestation due diligence too for their own sake as well as for everyone else’s. In the meantime, as somebody mentioned last time, Britain’s financial institutions are contributing $16.6 billion to businesses implicated in deforestation.

This is a huge global issue. Experts say that we must end commodity-driven deforestation by 2025 if we are to limit global warming to 1.5 degrees centigrade. At present, as a result of those investments, climate-critical tropical forests are shrinking. This is absolutely appalling. The UN’s high-level climate champions have begun to refer to deforestation as the new coal in investors’ portfolios. There should be no investment in companies involved in deforestation. It is quite simple.

The amendment responds powerfully to the GRI Taskforce’s advice. It has significant cross-party backing in the House of Commons. The Government are inclined to go for a weaker policy against the advice of their own expert task force on deforestation. I hope that the Minister will do all she can to persuade her colleagues in the other place to support Amendment 199 before Report. Rishi Sunak has promised that the UK

“will be the world’s first net zero financial centre”.

His support for Amendment 199 is an obvious step on the way. I thank the WWF, Greenpeace, Global Witness and Mighty Earth for their excellent joint briefing. I call on all noble Lords to support Amendment 199.

Pension Schemes Bill

Baroness Fookes Excerpts

Monday 12th January 2015 Lords Chamber

[Lord Bradley]

In moving this amendment to Clause 48, I will soon be moving back to government Amendments 45 and—

[The Deputy Chairman of Committees (Baroness Fookes) (Con)]

Perhaps I may interpolate. The groupings list is slightly in the wrong order. I have been following the correct order as it appears in the Marshalled List.

[Lord Bradley]

I am grateful for that clarification as, I am sure, is the whole Committee. In moving Amendment 44A I shall speak also to Amendments 47 and 48.

At this Committee stage, we have tabled amendments on all the recommendations of the Delegated Powers Committee. The Government will either accept the recommendations of that committee or put on record why they do not believe that the delegated power in question requires the affirmative procedure. That is what our amendments in this group do. The Delegated Powers Committee recommended that the power in Clause 48(3) be subject to the affirmative procedure as the power contained in it is, to quote from the report, “very significant”, not only in the context of Clause 48 but for the purpose of Chapter 2 of Part 4 as a whole. That is a very fair summary. The power enables the Secretary of State to provide for exceptions from the need to seek independent advice, which is central to ensuring that someone in a defined benefits scheme, for instance, is adequately informed of the risks and rewards of transferring out in order to access their pensions.

The power in Clause 48(7) is equally fundamental, giving as it does the Secretary of State the power to define what counts as “appropriate independent advice”. Our amendment is designed to probe exactly what would be meant by “appropriate independent advice”. Will the scheme trustees or managers be required to assess the appropriateness of the advice received—that in the circumstances of the particular scheme member the recommendation is the right one and transferring out will not harm their chances of having a good requirement income? The alternative is that the scheme trustees or managers will have to check that the advice received by the scheme member comes from someone appropriate who is regulated by the FCA. Our amendment gives the Government the chance to clarify that point. The difference in responsibility and cost is obviously significant.

I acknowledge that the Minister has already been kind enough to write to me, for which I am grateful, and the Government’s response to the Delegated Powers Committee has made it clear that the definition of “appropriate independent advice” will be through a regulation that is subject to the affirmative procedure, although as a consequence not directly part of the primary legislation in this Bill. None the less, it would be very helpful if the Minister could put on record the likely content of the regulation and give as many details as he is able to about it so that it addresses the issues I have raised in the amendments.

Can the Minister also give the Committee an update on the likely timing of that regulation? The response to the Delegated Powers Committee on 6 January says that it is likely to be “in the new year”. Given that it also says that it has to be in place by April, we are safe to assume that the new year does not mean January 2016. However, it would be helpful if the Minister could say when that regulation is likely to be laid so that there can be proper scrutiny of it. I beg to move.

Employment

Baroness Fookes Excerpts

Thursday 9th January 2014 Lords Chamber

Asked by

[Baroness Fookes]

To ask Her Majesty’s Government what is the outlook for both the number of people in employment and the claimant count in the Office for Budget Responsibility’s latest central economic forecast.

[The Commercial Secretary to the Treasury (Lord Deighton) (Con)]

My Lords, in its latest forecast, the Office for Budget Responsibility has revised employment upwards in every year. It now forecasts that the number of people in employment will reach 30.2 million next year—a record—and 31.2 million by the end of the forecast period in 2018. Furthermore, it expects the claimant count to fall from 1.43 million this year to 1.27 million next year, and to 1.1 million in 2018.

[Baroness Fookes (Con)]

My Lords, that is excellent and encouraging news. However, I remind my noble friend that youth unemployment is still worryingly high, although I believe that even that is falling. Can I encourage him, on behalf of the Government, to endorse the work of the non-profit-making organisations that do such effective work in getting young people into work, particularly Tomorrow’s People and the Prince’s Trust—both of which have been endorsed by an unlikely source, a journalist at the Guardian newspaper?

[Lord Deighton]

I absolutely agree with my noble friend that the good news on employment leaves us no room for complacency. Of all the segments of unemployment, youth unemployment remains just a little under 1 million, even though it has been coming down in the past quarter. Remember that about one-third of young people who are classified as unemployed are in full-time education. However, I absolutely endorse the point that my noble friend makes that the work done by the voluntary sector—supporting not just the unemployed youth back into jobs but, frankly, anyone for whom it is difficult to get back into the workforce, such as prisoners needing rehabilitation—is enormously valued and will get this Government’s support.