Financial Services and Markets Bill

James Davies Excerpts

2nd reading
Wednesday 7th September 2022 Commons Chamber

[Dr James Davies (Vale of Clwyd) (Con)]

My comments on this welcome Bill will focus primarily on its ability to improve access to cash and banking services. In my constituency, like many others, bank closures have become increasingly problematic. It is now seven years since the last bank shut in the city of St Asaph in the heart of my constituency, while Denbigh has also seen closures. Last year, TSB, Barclays and HSBC shut in Prestatyn, following the town’s loss of NatWest, Royal Bank of Scotland and building society branches in the preceding five years. Prestatyn High Street was left without a single bank or cash machine, despite being a busy regional shopping centre.

Cash remains important for many residents and businesses in my constituency. Following a campaign, and thanks to Cardtronics and Principality building society, three new free-to-use cash machines have now been installed in Prestatyn town centre. In addition, since June this year new legislation has brought about cashback without purchase services through various local businesses. However, banking services in the town remain lacking.

Last year, Derek French, a former executive of NatWest and the founder of the Campaign for Community Banking Services, identified the 50 communities in Britain where he believed shared banking hubs are most required. Prestatyn is one of the 22 of those communities that have already lost their last bank branch.

Earlier this year, the Royal Society for Arts, Manufactures and Commerce published a report suggesting that 10 million people would struggle in a cashless society. As incomes are squeezed, there is evidence that some people are turning back to cash to help them to budget. The Post Office reported record withdrawals in July 2022, while LINK ATM withdrawals still exceed £7 billion monthly.

[Paul Girvan (South Antrim) (DUP)]

I appreciate that the hon. Member has highlighted a number of banks and areas that are being decimated by banks removing themselves from the high street. A section of our community who are not IT literate have a major problem and are being totally disenfranchised. We need to put in place legislation to ensure that those people are not left without access to the banks that they have used all their lives.

[Dr Davies]

The hon. Gentleman is absolutely correct. I hope the Bill will go a long way to help that situation. I was coming on to say that 10% of people are planning to use cash more in the coming six months because of cost of living pressures.

The access to cash agenda owes much to Natalie Ceeney and her access to cash review. Following a landmark agreement at the start of this year, the banks and leading consumer groups formed UK Finance’s cash action group. LINK took on the role of assessing the impact of proposed bank branch closures on communities. As of 4 July, the agreement was extended to include communities where bank closures have already taken place. LINK can recommend new cash services, such as banking hubs and ATMs, according to the cash access needs in each community. New services will then be delivered by a new banking hub company set up by the banks, or, in the case of ATMs, by LINK.

This Bill puts this very welcome voluntary arrangement on a statutory footing. It confers on the Treasury a duty to prepare a cash access policy statement, which I understand is currently being drafted, and powers to “designate” banks and firms such as LINK and the Post Office to take steps in relation to that policy. Furthermore, it gives the FCA powers to take action on those designated firms.

This summer, I put forward Prestatyn for assessment by LINK for a banking hub. I am very grateful to Nick Quin, head of financial inclusion at LINK, for his visit to the town in January and for meeting me with his colleague Chris Ashton this week to discuss in detail my application on behalf of the town. A banking hub would facilitate cheque and cash deposits, and cash withdrawals, and banking staff from each of the big banks would be based in the hub on specific days to help customers with community banking issues. So this legislation is very much welcomed, and I extend my thanks to the Economic Secretary to the Treasury and, in particular, to his predecessor, my hon. Friend the Member for Salisbury (John Glen), who I know has put an awful lot of time into this agenda.

I urge the Government to consider ensuring that assessments of the needs of communities by LINK should be transparently published and that there should be a formal process of appeal. I also ask that consideration of access to banking services through the Welsh language be referenced in the cash access policy statement. Furthermore, it would be helpful to explore the scope of the community banking services that banking hubs could potentially be mandated to provide—for example, opening a new bank account, amending direct debits and standing orders, applying for a loan, arranging third-party access or commencing bereavement procedures.

It is also important to clarify whether the Bill will give the FCA the power to prevent the closure of a bank branch, ATM or cash access point of another kind where there is no suitable alternative in place, so that in future new gaps in provision do not occur. I understand that in recent times LINK has protected 3,000 free ATMs in remote and deprived areas, and funded new ATMs in more than 100 communities. I hope the Government will commit to protecting free cash withdrawals and deposits, and that that can be explored in the policy statement. An indication by the Minister of the likely publication date of the policy statement would be particularly appreciated.

Other elements of this Bill will enable credit unions to offer a greater range of products and services; strengthen the rules around financial promotions; and enable regulatory action by the Payment Systems Regulator to require the reimbursement of victims of authorised push payment scams. All of that is very much to be welcomed, but I urge the Government to ensure that the authorised push payment scam regulations cover all feasible methods of payment, both now and in the future.

I fully support the Bill, especially as it responds to significant concerns over the availability of cash and banking services. It is important that the Bill be delivered as soon as possible so that existing cash infrastructure can be protected.