Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps her Department is taking to ensure that small and medium-sized enterprises have access to affordable banking services in rural areas.

The government understands the importance of face-to-face banking to rural and coastal communities and is committed to championing sufficient access for both business and personal customers. This is why the government is working with industry to roll out 350 banking hubs by the end of the Parliament.

While decisions on branch provision are commercial decisions for banks themselves, Financial Conduct Authority (FCA) guidance requires firms to conduct a robust impact analysis. Firms must show they have considered customer needs and identified potential reasonable alternatives. The FCA also expects engagement with stakeholders at least 12 weeks before closure and firms must ensure that any replacement services, such as banking hubs, are in place before a branch closes. These measures aim to ensure closures are implemented fairly and transparently.

The FCA also has responsibility and powers to seek to ensure reasonable provision of cash withdrawal and deposit facilities. As part of this responsibility, the FCA must also seek to ensure that there is reasonable provision of free withdrawal and deposit facilities in relation to personal current accounts, and requires LINK, as the cash coordination body, to make a cash access assessment when a branch or ATM closes. In circumstances where LINK considers that a community requires additional cash services, the financial services sector will provide a suitable shared solution, such as an ATM, cash deposit service, or shared banking hub, for cash users in that community.

Alternative options for personal and business customers to access banking include the online and mobile banking, telephone banking and the Post Office. The Post Office Banking Framework allows personal and business customers to withdraw and deposit cash, check their balance, pay bills and cash cheques at 11,500 Post Office branches across the UK. The Post Office is required by the Department for Business & Trade to ensure that 95% of the total rural population across the UK is within 3 miles of their nearest Post Office.

The government’s Financial Services Growth and Competitiveness Strategy sets out a 10-year plan to ensure the UK remains a leading global financial centre, supporting innovation, investment, and consumer access. While the strategy focuses on growth and competitiveness across the sector, we recognise the importance of access to banking services in rural communities. HM Treasury continues to work closely with the financial services industry, regulators, and stakeholders to monitor provision and explore solutions, such as shared banking hubs and digital infrastructure, to maintain access to essential services.