Bank Branch Closures

Marion Fellows Excerpts

Wednesday 16th March 2022 Commons Chamber

[Ms Qaisar]

I thank my hon. Friend for his intervention, and what he is saying is important. Of course, when I was talking about older Members, I was not referring to him at all. [Laughter.] At that point, I will swiftly move on.

Throughout the course of the pandemic, we have witnessed the need for a more digitally connected society, both for work and socialising. Banking, however, is not excluded from that. While there has been a sharp increase in the uptake of digital banking, simultaneously we have also seen a mass exodus of banks from our high streets. This poses huge concerns for those who are not digitally literate, have no access to technology or are simply uncomfortable with the transition away from cash. An important point to remember is that where some of these people are not using digital wallets, online banking or digital banking it is through no fault of their own; they might have financial struggles that mean they are unable to get access to mobile data or wi-fi. That is hindering their access and we are not necessarily talking about people from an older age demographic. The 2019 Access to Cash final report found that more than 8 million people would struggle directly as a consequence of a cashless society. Cash is therefore essential to ensuring that vulnerable groups such as older people or low-income households, who often have limited access to digital banking, are not excluded.

[Marion Fellows (Motherwell and Wishaw) (SNP)]

As the granny of the House, I have to say that I have an electronic wallet on my phone. However, does my hon. Friend agree that it is about time the Government brought forward their access to cash Bill, which has been promised for quite a long time?

[Ms Qaisar]

I thank my hon. Friend and constituency neighbour for raising that important point. She has raised it on a number of occasions and I fully support her in all her comments.

While we are trying to become this more digitally inclusive and digitally literate society, there are projects going on in that regard. For example, in my constituency, a project funded by Connecting Scotland, a Scottish Government initiative, has been working alongside the community to help people to get online and into the digital age at Lorne Gardens retirement complex in Salsburgh. The project supplies elderly constituents with 200 digital devices and mi-fi boxes so that on Tuesday nights tenants can meet to share skills with an aim to building up relationships and increasing their confidence when using their devices. I am delighted that projects such as this are providing older constituents with vital digital skills that could be used for navigating online banking. However, this should not detract from the fact that many older people still ultimately prefer traditional methods of banking. The really important point about such projects is that they teach people transferable skills, because once they get online and are able to use digital banking, they can use those skills to navigate other websites—and maybe not become too addicted on online shopping.

--- Later in debate ---

[Lucy Frazer]

I am going to carry on because the hon. Member for Airdrie and Shotts, who secured the debate, made many points and I want to respond to them.

The Financial Conduct Authority has also set out its expectations of firms when deciding whether to reduce the number of their physical branches or the number of free-to-use ATMs. FCA guidance states that firms are expected to carefully consider the impact of a planned closure on their customers’ everyday banking and cash needs.

The hon. Members for Strangford (Jim Shannon) and for Reading East (Matt Rodda) talked about the importance of going into a physical location for those such as the elderly and the disabled. As well as the innovations around mobile and online banking, there are alternative options to access everyday banking services via telephone banking and also, importantly, via the Post Office. The Post Office plays a significant role in servicing people’s everyday banking needs across the UK. The Post Office banking framework allows 99% of personal banking and 95% of business customers to deposit cheques, check their balance, and withdraw and deposit cash at the 11,500 Post Office branches right across the UK. As the hon. Member for Airdrie and Shotts pointed out, it is important that there is somewhere to take that cash, which is why the Post Office provides such an important service.

[Marion Fellows]

Will the Minister give way?

[Lucy Frazer]

I am going to come on now to the point the hon. Lady made about access to cash. Access to cash is one of the services that bank branches and post offices help to deliver, but the Government understand the importance of cash to the daily lives of millions of people across the UK, particularly vulnerable people, which is exactly why we have committed to legislate to protect access to cash.

Last year, the Government consulted on further proposals for new laws to make sure people need to travel only a reasonable distance to pay in or take out cash. The Government’s proposals are intended to support the continued use of cash in people’s daily lives and help enable local businesses to continue accepting cash by protecting deposit facilities. We are carefully considering the responses to the consultation as we develop legislation and will set out next steps in due course. Encouragingly, following the Government’s commitment to legislate, firms are working together through the Access to Cash Action Group to develop new initiatives to provide shared services.

I wish to touch on another way for people to access the banking system in person. The hon. Member for Reading East mentioned banking hubs. The introduction of shared banking hubs is an exciting development. Last year saw the successful pilot of the initiative, with two bank hubs offering counter services run by the Post Office and dedicated spaces for customers to see community bankers from their own bank. The findings of the pilot revealed that, as of October 2021, £4.65 million of cash had been deposited at the two pilot sites. Almost a quarter of local businesses said the pilots meant they no longer needed to close their shop to get or deposit cash. As a result, the two bank hubs have been extended until at least the spring of 2023.

Building on the experience gained in the pilots, last December the industry announced its intention to introduce five more Post Office bank hubs in Acton, Brixham, Angus, Knaresborough and Syston. The bank hubs are a commercial initiative, meaning it is for industry to play a key role in the provision of appropriate facilities for customers.

At the beginning of her speech, the hon. Member for Airdrie and Shotts talked about HSBC’s announcement of the closure of some banks. I reassure her that all the branches that are to close have a post office within 1.5 miles for everyday banking transactions.

[Marion Fellows]

Will the Minister give way?

[Lucy Frazer]

I am going to conclude because I fear I am running out of time.

The Government understand what is at stake here and are working hard to do right by communities up and down the country. Banking is changing in ways to which industry can and should respond but, as I have said, it is also right that the impact of branch closures on people and communities is understood, considered and, where possible, mitigated, so that everyone, whoever they are and wherever they live, continues to have access to the services they need.

Question put and agreed to.