Branch Closures
In June 2023, the Financial Services and Markets Act was introduced. The Act aims to 'strengthen the United Kingdom's financial services industry, ensuring that it continues to act in the interest of all people and communities'.
The new law will set minimum distances for cash withdrawals and deposits. This can differ between personal and business accounts requirements and also between urban and rural locations.
With its new powers, the FCA could stop banks and building societies from closing cash access services if there is no suitable alternative within a reasonable distance. Which?'s lobbying has made sure that the considerations include free access to cash.
13,900 free-to-use ATMS in the UK have been lost since 2018, leaving many areas across the UK with particularly poor access to cash, and banks and building societies have closed (or scheduled the closure of) 5,699 branches since January 2015, at a rate of around 54 each month.
“The banking sector needs to answer some serious questions about its corporate social responsibilities and the government cannot allow the relentless closure of banks to continue.”
- Caren Evans, Unite National Officer
Why do banks close branches?
The bank's main reasons for closing bank branches seem to be reductions in customers using the branch (a regular customer is someone who uses the counter or deposit machine for 11 out of 12 months in the last year), and customers using digital offerings (whether that's solely using digital or using a branch as well).
The British Banking Association said that in 2015 customers used their mobile phones to check their current accounts 895 million times, which is more than double the 427 million times they entered their branches. By 2020 that number was estimated to rise to 2.3 billion times, far more than internet, branch or telephone banking combined. This was even before the pandemic. The sector has thus far failed to answer the questions about those without the technology or infrastructure including broadband to be able to use these forms of banking.
Unite are committed to making sure that the banking sector meets their obligations to customers and takes their social responsibilities seriously.
What impact do closures have?
The constant closing of branches in LBG and beyond leaves more and more people having to travel further and further just to be able to access basic banking facilities.
The next year will likely see the number of bank branches closed by the big banks to over 5,000. Cash transactions naturally stagnated over the course of the pandemic but are steadily rising again after the ease of most restrictions. Removals of bank branches will likely cost businesses and customers more in an already turbulent economic environment.
Some of the most vulnerable in our society continue to rely on cash. Despite the rise in the use of apps and online resources some people must still manage their finances with cash and need to use a local branch. Research has found that those on the lowest incomes are more likely to use a bank branch.
The Financial Inclusion Commission said in October 2018 that half the 2.7 million people who rely mainly on cash have a household income of less than £15,000 and these people are being increasingly penalised with the best deals for utilities, phones and tickets only being available online for card holders.
Unite do not feel that the alternatives offered when branch closures happen provide a like-for-like service to customers.
What alternatives are there to bank branches?
In short, some would say that the only credible alternative to a bank branch is another bank branch.
Unite do not feel that the alternatives offered when branch closures happen provide a like-for-like service to customers. The Post Office, whilst not closing as many branches, is still seeing a small reduction in its number of branches, and a large reduction in the number of branches that are directly managed by the post office
Using competitors’ or free to use cash points mean that you may have to make repeated journeys to take out large amounts, and trials of ‘banking hubs’ have not been running for long enough to see whether they are successful yet. Unite reps in Lloyds also commented that is it sad to go from LBG being the only branch in town to having to share property with 4 other rival banks.
What should we do about branch closures?
After the latest round of branch closures were announced, Unite's branch closure team will review the justification and impact of each of the closing branches. We will be speaking to community groups for their views and where there is interest to oppose a branch closure we will be by their side at every step of the way.
If your branch is affected by the recent round of closures, whether you are a colleague, customer or community member, please get in touch with us by emailing LBG.Support@unitetheunion.org