Face-to-Face Banking: Rural Areas

Caroline Voaden Excerpts

Tuesday 1st September 2026 Westminster Hall

[Caroline Voaden (South Devon) (LD)]

I beg to move,

That this House has considered the provision of face-to-face banking services in rural areas.

It is a pleasure to serve under your chairmanship, Mr Wishart. Banking services in rural areas have been decimated. While big banks make billions in profits, they close branches with impunity, turning their backs on customers and leaving small businesses struggling with the impact. Last year, Lloyds reported a £6.7 billion pre-tax profit and yet in the same period it shut 218 branches, with a further 95 to close this year. Sixty-four per cent of all bank and building society branches that were open in January 2015 have closed in the past 10 years, numbering more than 6,000. In my constituency, which covers about 450 square miles, we have one bank branch left, and I wonder how long that will be there.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Does the hon. Member agree that the scale of closures is phenomenal and that while the banking hub roll-out is welcome in rural areas such as mine and hers, the scale of the closures is defeating that roll-out? We need an increase in the number of banking hubs to meet the demand on the streets.

[Caroline Voaden]

I will get to banking hubs in just a minute.

Why do we allow closures to happen? Why do the Government not act with urgency to turn around the decimation in rural banking, which has the biggest impact on the most vulnerable people—the elderly, the disabled—those who cannot use online services and areas where digital connectivity is so bad that using online services can literally be impossible? It is simply outrageous that banks have been able to get away with this to such an extent and at such speed. I call on the Labour Government to address the issue with urgency.

People still want to use in-person banking services, even young people and those who already bank online: 81% of UK adults say that they have accessed in-person banking services at least once in the past two years, while 48% say they have accessed in-person banking services every month. It is simply not true that everyone is happy to bank online all the time.

[Stuart Anderson (South Shropshire) (Con)]

In a remote area such as South Shropshire, just over half of my constituents have high-speed internet, so face-to-face banking is absolutely important. We have seen the issue in Bridgnorth, Church Stretton and Ludlow. Does the hon. Lady agree that the Government have to take that into consideration? It is not one size fits all.

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[Caroline Voaden]

I absolutely agree. On my tour this summer, I met someone who was frozen out of her bank. She could not get the confirmation code on her phone because she has no mobile phone signal, so her bank account is now closed to her. She will have to travel more than an hour to get to a bank to get back into her bank account. It is an absolute mess.

Face-to-face banking is simply essential for millions of people and thousands of small businesses across the UK. When a loved one has died and finances have to be sorted out, it is normal to want to speak to another human being, not to a chatbot. People might need emergency access to funds, to make a complicated transaction or to send money abroad—out-of-the-ordinary banking matters that chatbots simply do not understand and cannot help with. Businesses might want to take out a loan, or extend or increase borrowing. Yes, people could do that over the phone, but for many a face-to-face conversation is more manageable. The rapid and ruthless shift towards online banking may suit those of us who work odd hours, travel around a lot and would frankly find it hard to pop into our high street branch, but at the same time, it is potentially disenfranchising millions of people from banking services.

[Alan Mak (Havant) (Con)]

In response to some of the things that the hon. Lady is describing, the last Conservative Government legislated to protect access to cash, but I think we now all recognise the need to legislate for access to face-to-face banking. Will she join me in calling on the Minister to support my In-Person Banking Services Bill to deliver more banking hubs?

[Caroline Voaden]

I will come on to the legislation passed by the previous Conservative Government in just a minute.

In rural areas, poor internet, non-existent public transport and a higher proportion of elderly residents who are less likely to manage their money online mean that losing the local bank can have a huge impact. The wipe-out in rural areas is mind boggling. A staggering 86% of people in rural areas have seen their closest bank branch—which 10 years ago was within a mile—close. For them, there is no alternative bank to switch to. As banks have closed, the impact of losing access to banking services has been disproportionately felt by those in rural areas, who simply cannot go to another bank in town. Instead, they are left navigating sporadic or non-existent public transport, having to set aside half a day for the outing just to visit the bank. It can be a major mission in a community that is poorly serviced.

[Rachel Gilmour (Tiverton and Minehead) (LD)]

Like my hon. Friend’s constituency, mine is large at 1,250 square miles and the population is elderly. The No. 25 bus runs every two and half hours. If a constituent needs to bank in Taunton, it takes five hours to get there and back. Does she agree that increasing face-to-face banking services, particularly in enormous constituencies such as mine, is crucial?

[Caroline Voaden]

I could not agree more. We are facing a perfect storm of decimated public transport; appalling digital connectivity that must be addressed, as we repeatedly say in this place; and closure of banking services. Those three make a toxic combination.

Consumers and small businesses are frustrated with the service they are left with, as is the case in Totnes in my constituency. In September last year, Lloyds announced it was closing the final bank in town, leaving residents without access to banking services beyond a couple of free ATMs and the post office. It seemed obvious to me that, when Lloyds closed its doors, the remaining banking services in the town would be insufficient and that it would get a banking hub. We have a thriving market once a week, where many people use cash. We have 120 independent high street businesses, an older than average population, very poor digital connectivity and poor public transport to other towns. Not only does the town have 13,500 residents, but thousands more people in surrounding villages use it for banking.

The cash access request that I submitted to Link was turned down. I appealed but, to my huge disappointment, Link upheld its original decision, despite my meeting officials from the Treasury and raising the matter with the Prime Minister.

[Becky Gittins (Clwyd East) (Lab)]

The hon. Lady’s description of using Link for a cash access assessment for banking hubs rings true in my experience of helping my community apply for one in the rural town of Holywell, which serves lots of villages. It is not properly understood how important access to cash is, not only for local people—and the age demographic point is also true of my constituency—but for local businesses, particularly rural ones. Does the hon. Lady agree that rural and semi-rural towns should be recognised in the outcomes of the review when it is published in October?

[Caroline Voaden]

I absolutely want to see that. When Link assesses rural locations, it considers whether alternative access to cash facilities are available within three miles or 30 minutes on public transport. For Totnes, it noted that alternative facilities were available within a 19-minute bus journey—that is on a really good day. But that is only relevant to those who live in the centre of Totnes. If someone starts from one of the many satellite villages that use the bank in Totnes, it is a completely different story. There may not even be a bus to get into Totnes to pick up the other bus to get to Paignton and the bank.

The impact on local residents and businesses will be familiar: queues at the post office, which become impossible in the run-up to Christmas; hundreds of extra customers for the post office, which has no extra space or staff to cope; and businesses less keen to accept cash, because the only place they can pay it in is the post office. If someone is running a shop on their own, as I did for six years, it is impossible to shut up shop and go down the road to queue at the post office, because they have to keep the shop open to make money.

[Edward Morello (West Dorset) (LD)]

Bridport in my constituency is sometimes referred to as Totnes-lite. Like Totnes, it has a high concentration of independent retailers, tradespeople and small businesses who rely on cash deposits. On average, a small or medium-sized enterprise deposits cash about 25 times a year and withdraws cash about 15 times a year. Groves Nurseries highlights the exact issue that my hon. Friend mentions: how to keep the business open, run a successful operation and drive to the nearest town every time there is a need to deposit or withdraw cash.

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[Caroline Voaden]

I could not agree more. It is really important that we protect access to cash. My residents do not want to feel that they are being forced into a cashless society. Small businesses used to use the bank’s night safe, but that option has now gone.

[Amanda Hack (North West Leicestershire) (Lab)]

There are lots of similarities between Coalville and Totnes, including a monastery just a few minutes away. The biggest issue is that banking hubs, although incredibly important, do not provide the excellent business banking services that businesses need. Does the hon. Member agree that the issue is about business support as well as cash access, and that we need to expand the theme of banking hubs?

[Caroline Voaden]

The hon. Member is absolutely right. We have two banking hubs in my constituency, opened before the rules were tightened. People have said to me that even those banking hubs do not provide all the services they need. In a 21st-century banking offer for rural Britain, banking hubs are the obvious solution—rather than a branch of every bank—but they must be competent and capable of offering all the services that people need.

Five years ago, the rules for receiving a banking hub were much broader, and Dartmouth got one just in time. The current criteria for banking hubs are far too narrow. In September 2024, the Financial Conduct Authority substantially tightened the rules, placing the focus solely on access to cash. The current criteria completely discount all other reasons why someone might need to use a bank. They also do not take account of poor public transport and an older than average population. They ignore the fact that banks do so much more than just give out cash.

I urge the Government to expand the rules for granting a banking hub. I have met with the Economic Secretary to the Treasury, who shares my view that the current criteria are far too narrow. I heard the former Prime Minister tell the Chamber that a banking hub can be rolled out wherever a community needs one, but the policy that Link adheres to does not reflect that, so it must be changed. If necessary, we need legislation to make the banks listen. There simply must be a better minimum service coverage of banking hubs across the UK. So many MPs are campaigning for them that it is clearly a country-wide problem. We know that the banks can afford it, so for once, this is not a question of finding the money or funding. They can afford it.

The Financial Services and Markets Act 2023, passed by the Conservative Government, gave the Financial Conduct Authority powers to protect cash access but, astonishingly, did not extend those powers to protecting wider banking services but limited them to cash. Back then, Labour tabled amendments to the Bill to extend the power to protect banking services, but they were not taken up by the Conservative Government. Now in government, Labour has been very slow to do what it pushed for in opposition.

I urge the Government to rediscover their passion for protecting banking services by amending the Financial Services and Markets Bill that is currently making its way through the other place. We must ensure that face-to-face banking services receive the same protections as access to cash, whether that be via banking hubs, as should be the case in Totnes, or via other means, such as increasing the provision in post offices. As the Post Office is in trouble these days, with many branches closing, surely there must be an all-encompassing solution to make these places viable.

Liberal Democrat peers in the House of Lords have tabled an amendment to the Financial Services and Markets Bill, and I wholeheartedly support it. It would require the Treasury to consider whether assessments following bank closures should extend beyond access to cash to evaluate local community needs for essential in-person banking services when making regulations. The answer is, “Yes. Absolutely, it should,” because banking is about more than just getting cash out of a hole in the wall. I hope that the Government will adopt the amendment.

I look forward to hearing the outcome of the Government’s access to banking services review, which is due to be published shortly. I am sure that it will lay bare the evidence of the real-world impact of bank branch closures and demonstrate that the Government must go further in ensuring that people can access banking services.

Having a bank account and being able to access a range of banking services are a necessity in modern society, not a luxury. The Government must rebalance things in favour of our high streets and communities and put an end to the favourable treatment for big banks, which repeatedly cut their services with no regard for the impact on the lives of their customers. Enough now—it is time that the Government took action to protect and restore face-to-face banking services across rural areas.

[Several hon. Members rose—]

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[Mark Garnier]

My right hon. Friend raises another big argument that we could have on the issue of rural broadband, but it is worth making the point regarding internet connectivity that I was just coming on to. I know this is as painful in other constituencies as it is in Wyre Forest. According to the financial lives 2024 survey, adults living in rural areas were,

“disproportionately more likely to report having poor or no connectivity.”

We must also remember that many of our local businesses rely on face-to-face banking services. According to the House of Commons Library, an average small business deposits cash twice a month, withdraws cash once a month and gets change for their cash registers once a month. It is worth bearing in mind that, typically, we have about 3,500 businesses per constituency, so an awful lot of people rely on these services.

I remember the impact that was felt in 2015 when HSBC closed the last bank in Bewdley in my constituency; people were utterly dismayed. Happily, the post office stepped in and was able to help resolve the issues, but since then we have now discovered that that the post office is under threat. We are working on it, but it demonstrates the point that things are changing very quickly.

There is also a more subtle outcome of a sharp reduction in bank branches: the relationship between a bank and the local economy is being dramatically reduced, which has implications for our wider economy. Local branch managers living in a community, providing banking services to local businesses and understanding local economic opportunities as well as pressures, are well placed to understand the commercial value of a loan application by a local business. That is important.

An application for a business loan is usually something that business owners and managers want to get in place as fast as they can, but the reality is that applications for smaller business loans now take an average of nine months to be approved. That is not good for our local economies. Furthermore, banks need to lend money. That is the business they are in. Each loan creates a banking asset. Indeed, 95% of the money in circulation is the result of banks lending it into existence through fractional reserve banking. It is in the interest of both our banks and our economy that they lend, but if it takes too long, others will step in. That can be good, but it can be bad.

Private debt is gaining traction alongside private equity. Meanwhile, unregulated loan notes have been central to some recent mis-selling issues at the smaller end of the market. That is not the fault of the banks, but the lack of local banking services opens doors to alternatives, not all of which are properly understood, risk-assessed and regulated. However, we must recognise that banks are businesses. I do not want to be an apologist for banks, but they do provide a very important service, which they have to do in a profitable way. They have to make commercial decisions, and they have to consider the footfall in their branches and the take-up of digital banking.

[Caroline Voaden]

The hon. Member says that banks have to make profits. Last year, Lloyds made £6.7 billion in profit. Does he agree that £6.7 billion is such an incredible amount of money that asking banks to put more money into maintaining services for customers across rural Britain is not an exceptional or particularly demanding ask? The money is there. Nobody needs to be making £6.7 billion of profit a year.

[Mark Garnier]

As I say, I am not an apologist for banks, and I am keen to ensure that we get a balanced argument. The hon. Lady is absolutely right that that is an awful lot of money, but it all comes down to what should be the right and proportionate response. I do not disagree with her fundamental point, but the question is slightly more complicated.

I will give the hon. Lady an example from my constituency. Not so long ago, I went into a branch of Santander. It was a Thursday, and I was banking a cheque. I was the fourth customer that the bank teller had seen that week. It was utterly dismal, and that was in the centre of Kidderminster. The branch was closed the following week. There are issues for banks—whether they should necessarily be opening branches that could get one or two customers coming in a week. There is a balance to be struck. If a branch is not viable, should the bank keep it open?

We must look at the other opportunities. The last Conservative Government recognised that and were committed to retaining vital banking services. That is why we provided a system of free and convenient access to banks through the post office branch network, why we introduced protections for access to cash and why we enabled the development of banking hubs through the Financial Services and Markets Act 2023.

I am glad that the Government have continued our positive trajectory, especially through their commitment to 350 new banking hubs by 2030, but I also welcome the independent access to banking services review chaired by Richard Lloyd. We are interested to see its outcomes and recommendations, but would be grateful if the Minister gave us a clue as to when it will report. Decisive Government action could ensure support for underserved communities in good time and mitigate the impact of bank branch closures.

This and previous debates on this subject have shown just how much Members support bank branches, especially in rural areas. Members have emphasised how many of their constituents and local businesses still rely on those services, which is especially true in rural areas such as South Devon. It is vital that the Government step up to support communities who lack adequate banking services provision.

The publication of the access to banking services review will help to identify the next steps, but many people will be frustrated that the Government are undertaking another review and not taking action. As the previous Prime Minister, the right hon. and learned Member for Holborn and St Pancras (Keir Starmer), said, people are “impatient for change”. When it comes to this issue, our constituents do not want to wait much longer.