Bank Closures and Banking Hubs

Wendy Chamberlain Excerpts

Thursday 5th June 2025 Commons Chamber

[Ian Lavery]

I thank the hon. Lady for her intervention; I will cover some of those points.

I mentioned Blyth, the biggest town in my constituency. The third largest town in Northumberland, Bedlington, saw its last branch close just last month. From August in my constituency, only Ashington, the county’s third largest town, will have a high street bank, but many will wonder how long that will last. Who is affected by these bank closures? Like any change of this nature, is it not the most vulnerable who find it the most difficult? The FCA’s research in 2019 set out how problematic the requirement to travel bigger distances for banking services was for older people, and provided evidence for the slow uptake of online banking services by older people.

Only last week, my office was contacted by an elderly gentleman from Guide Post. His local bank closed in 2000. He moved to the branch in Bedlington, a few miles away, where he stayed for nigh on 25 years before that closed. Then he moved to the one in Blyth, a few miles further away; that branch is now to be closed, as I mentioned earlier. He is unable to access internet banking, he does not have any family, and he is unable to travel any further distances, whether by using basic transport services or otherwise.

[Wendy Chamberlain (North East Fife) (LD)]

As others have said, the hon. Member has been very generous. His speech is making me think about vulnerable customers, and access to responsible credit for them. Just a couple of weeks ago, the all-party parliamentary group on fair banking had a roundtable. Actually, online banking services do not help those really vulnerable people, where there is a sense of shame in potentially needing small amounts of help and support. Does he agree that that is something else that we, and the Government, need to consider?

[Ian Lavery]

I fully agree with the hon. Lady’s intervention. It is up to us, in this place, to speak up for those vulnerable people.

We know that the banks profit and make savings from branch closures. In January 2020, a House of Commons Library briefing pointed to the major banks enjoying a 6% decrease in overhead costs through branch closures. In 2024, HSBC reported the highest net profit among the largest UK banks, reaching just under £20 billion; Barclays followed, with around £6.36 billion; and NatWest’s net profit was approximately £4.8 billion. The big four UK banks—Barclays, NatWest, Lloyds and HSBC—are estimated to have made a combined £44.7 billion in profit. They are not hard up, you know —they really are not hard up. That is why it is important that we, as elected representatives, press that point home to Government.

The FCA’s current powers around bank closures have been mentioned two or three times already, and they go to the heart of the issue. Unfortunately, the banks are a law unto themselves. The FCA has no statutory powers to prevent bank closures. It can only seek to influence such decisions through its guidance notes. On branch closures, the FCA guidance requires banks to assess how closures will affect customers, especially those with vulnerabilities, using data on usage trends; consider alternative solutions to customers’ needs, such as free ATMs, post offices and banking hubs; and ensure that customers are given clear information and that they are not misled. Although the FCA cannot stop closures, it can require pauses in branch closures if it is not satisfied that the important matters that I have just mentioned have been considered adequately. Given everything we are talking about, I think that approach fails. Legislative changes are needed to ensure there is much more flexibility in that guidance.

Link is a not-for-profit company that is charged with making access to cash available, largely through ATMs. It can charge for using its ATMs and is allowed to charge more in rural areas. Prior to the Financial Services and Markets Act 2023, the major banks ran a voluntary assessment scheme using Link to carry out research into the effects of planned branch closures. The Act made the Link assessments mandatory but did not significantly widen their scope. The Link assessments analyse the impact of branch closures in terms of access to cash, and outline existing and recommended new alternatives, such as banking hubs.

In Blyth, which is Northumberland’s largest town, the banks ran out of cash over a bank holiday weekend not many weeks ago. Blyth—it is a massive place—did not have any cash. Can you imagine that? It did not have any cash whatsoever simply because the cash machines ran out and the Morrisons supermarket cash machines were inside the closed store. An hon. Member raised the point about having different cash machines in different places, but if people rely on a supermarket for access to cash, perhaps as a last resort, and it closes at 7pm or 8pm, then they do not have any access to cash.

--- Later in debate ---

[Wendy Chamberlain (North East Fife) (LD)]

It is clear that we all care about our constituencies. My constituency of North East Fife is well below the UK average in the statistics on access to cash. The new powers and obligations given to the FCA under the Financial Services and Markets Act 2023 have gone some way towards addressing these problems. It is important to remember that everything happening before was voluntary. We have twice gone through the review process with Link—successfully in Anstruther, but frustratingly not so in Cupar.

The Anstruther banking counter is to some extent a success story. The banks closed and the post office closed, but a review was carried out and recommendations were made for a counter providing cash deposits and withdrawals. However, there were some problems with the process that I hope can be ironed out. The review was requested by a local organisation that had hoped to provide space for the counter, if recommended, knowing that a lot of its customers use cash and there is no nearby ATM, but it was not automatically advised of the outcome of the assessment and found out only after the fact. That meant it did not get the chance to make an input to those making an assessment of possible locations. I myself was not aware of the opening of the hub until I heard incidentally from a local councillor who was involved in the running of the location where the hub opened. If elected representatives and the local media do not know about counters opening, I am very concerned that the public will not know either.

However, the main issue, which many have picked up, is that the cash counter is not a banking hub. Part of the picture, as I understand it, is that we could have more support in Anstruther if someone was willing to take on the post office, but no one wants to, and having met the National Federation of SubPostmasters earlier this year, I can understand why. This is a problem that the Government need to address and I hope the Minister can do so in her remarks. What are the Government doing to make taking on a post office more attractive? They are vital to the success of banking hubs, but also the health of communities more generally.

The other part of the picture, as others have touched on, is that the legislation only requires maintaining access to cash, not banking services. That is a real oversight. I mentioned, in my intervention on the hon. Member for Blyth and Ashington (Ian Lavery)—I congratulate him on securing the debate—that the all-party parliamentary group on fair banking gave us some quite worrying stats on the financial health of household incomes. It is incumbent on banks to help people better manage their finances so that we do not end up with situations where people are in debt. I asked the Minister whether the financial inclusion committee, which she chairs, would look at access to banking services. I hope she will be able to update us on that today.

The last point I want to make, which others have mentioned, is about the challenge around ATMs. We have had a big problem in Leven where, in just the last few weeks, the final bank has closed. We have a Nationwide, but it consistently runs out of money and customers are really showing their frustration. Whether it is more cashpoints or more replenishing of what is already there, something has to be done. The assessments need to take better consideration of what cash usage actually looks like in an area.