Community Bank Closures

William Wragg Excerpts

Thursday 8th February 2018 Commons Chamber

[Mr William Wragg (Hazel Grove) (Con)]

It is a pleasure to follow the hon. Member for Stoke-on-Trent North (Ruth Smeeth), who gave a splendid exposition of the issue we face in the country and clearly showed her dedication to her constituents.

The number of Members present is testament to how important this debate is. Given the extent of bank branch closures, it is likely that we all have an interest in this issue because of what is happening in our own constituencies. In the past 25 years, the UK has seen the closure of nearly 10,000 bank branches, which is over half of all of them. The rate has accelerated, with more than 600 branch closures in the past year. It is right that we should embrace technological change, but the rise of new approaches, including online banking, means that we are faced with the decline of traditional banking.

Many customers have a preference for in-branch banking. They prefer face-to-face service and the chance to talk to people, to get financial advice, to access their money physically, and to have the security of seeing their bank transaction take place and of receiving a paper record to prove it. In recent times, against a backdrop of scandals, one of banking’s redeeming features has been the personal relationships that banks still offer to customers. Members of the community often struggle when a bank closes, and closures are particularly important for elderly or vulnerable people who may not use online banking.

In recent years, my constituency has suffered from the closure of several local banks. Like other Members, I am sure, my constituency postbag and inbox have swelled as a result. In May 2016, Lloyds bank earmarked its branch in Woodley precinct for closure as part of a cost-saving measure. At the time, I presented a 583-signature petition to the House on behalf of local residents, calling on Lloyds to reconsider its decision. Despite that large demonstration of popular feeling, the bank went ahead with the closure regardless. That decision made it harder for hundreds of customers to access their money and to get financial advice and that face-to-face service.

The NatWest has also recently closed branches in two local towns, namely, in Romiley and in Marple. The last case was particularly galling as the justification given by NatWest at the time of its closure of the Romiley branch during the statutory consultation process was the proximity of the Marple branch as an alternative. However, just a few months after shutting the first branch, the bank announced its intention to close the Marple branch, too. Customers who had taken early assurance about a back-up branch in good faith felt that they had been treated as fools and that the behaviour of the bank in this instance made a mockery of the process of consulting on closures. Of course, if customers feel sufficiently overlooked, banks may well find that they start voting with their debit cards and switch accounts.

Although I accept that decisions on bank closures are ultimately a commercial decision, I urge all banks to show a lot more consideration of the needs of customers and how they can best be met. They must think carefully before making any decisions on a branch closure, particularly in rural or semi-rural areas, which have been hard hit by these measures.

Although it may not be a matter for the Government to intervene directly in a decision on an individual basis, the Government do have a role in promoting general access to banking services. Therefore, I ask the Economic Secretary to the Treasury to consider placing a duty on the Financial Conduct Authority to promote financial inclusion as one of its core objectives, as recommended by the Financial Inclusion Commission. That duty could include a mandate to require financial service providers to meet certain standards relating to access and customer service. Such a duty should require the design of products and services to be more inclusive and to maintain access to essential services for people who may not be online.

During my research for this debate, I was pleased to learn that a lot of the services offered by banks can now be done over the post office counter. Post offices continue to offer basic banking services to many bank customers. Indeed, around 99% of a bank’s personal customers and 95% of its business customers are now able to withdraw cash, deposit cash and cheques and make balance enquiries at a post office counter. All post offices can take cash deposits of up to £2,000. However, that begs two important questions on which I would like the Minister’s thoughts when he winds up. First, what is being done to ensure that local people are aware of the options available following the closure of a local branch? Secondly, and perhaps most crucially, although this is good news for customers, why is it deemed acceptable for privately owned banks, and indeed publicly owned banks in some circumstances, to close their own branches and rely on the state-owned Post Office to process their transactions for them? Are they making a profit while the overhead costs are met by the Post Office?

I thank all Members of the House for turning up this afternoon on our last day of term and for participating in this debate. I look forward to hearing their contributions and the response from the Minister.