Question to the HM Treasury:

To ask His Majesty's Government what steps they plan to take, if any, to set up a rural banking hub to avoid a lack of banking provision within ten miles.

Decisions on opening and closing branches are taken by the management team of each bank on a commercial basis, which it would be inappropriate for the Government to intervene in.

Guidance from the Financial Conduct Authority (FCA) sets out its expectation of firms when closing a branch; they must carefully consider the impact of a planned closure on their customers’ everyday banking and cash access needs and consider possible alternative access arrangements. This will ensure the implementation of closure decisions is done in a way that treats customers fairly.

An alternative for those who prefer to conduct their everyday banking face-to-face is the Post Office, which enables customers to carry this out at 11,500 post offices across the UK. The Post Office is required by the Department for Business and Trade to ensure that 95% of the total rural population across the UK to be within 3 miles of their nearest Post Office outlet.

New shared Banking Hubs are also being introduced providing cash and basic banking services, and dedicated space where community bankers from major banks can meet customers of that bank. Banking Hubs are a commercial initiative provided by participating retail banks and building societies in partnership with the Post Office. Decisions regarding the operation and location of Banking Hubs are taken by the parties involved.

Regarding access to cash, the government legislated to protect access to cash services through the Financial Services and Markets Act 2023. Following this, the government recently published a policy statement. This included setting the government’s current understanding that the vast majority of people in predominately rural areas have access to cash within 3 miles of where they live, while the vast majority of people in predominately urban areas have access to cash within 1 mile of where they live. This is based on FCA analysis and concerns access to cash services in general rather than bank branches. The policy statement sets out that the FCA, as responsible regulator, should seek to maintain this distribution of cash access services, while recognising that cash needs may differ by location and change over time. The government’s policy statement is available on gov.uk.