New rules strengthening protections for access to bank branch services proposed

Banks and building societies will have to do more to look at the impacts of reductions to their services, such as cutting branch opening times, under City regulator proposals.

The Financial Conduct Authority (FCA) has warned that some banks and building societies are not doing enough to properly understand the impacts when they make changes and to keep their customers informed.

Extending communications to other groups such as local charities and councils to understand the wider impact from changes to services is also included in the proposals.

The regulator’s financial lives survey in 2020 found that around a quarter (27%) of adults with a day-to-day account regularly used a branch. One in six had a branch they previously used regularly close down in the previous 12 months.

The FCA said it was increasingly seeing instances of firms permanently reducing opening hours or available services, sometimes following temporary changes introduced because of Covid-19.

The regulator wants to extend its guidance so that it applies where firms partially close a branch in the same way as it does to full closures.

It is proposing to define a “partial closure” as a long-term reduction in branch opening hours or days or a reduction in branch services, such as the removal of a counter, where this would have a significant impact on customers.

This would also capture extended periods of closure lasting six months or longer, which might otherwise be seen as “temporary”, such as closures due to long-term building works.

The FCA said on its website: “We know that in some cases firms make decisions to close branches that are still being used by significant numbers of customers.

“We have also seen firms making decisions to remove facilities such as counter services from branches, or to permanently and significantly reduce the hours that branches are open.”

The FCA is inviting responses by July 26 2022.

In 2020, initial guidance on branch closures and conversions was published in the wake of the Covid-19 pandemic and the FCA said it was continuing to monitor cash access points and engage with firms on closure plans.

The UK Government recently confirmed that the FCA would be given powers to make sure cash remained accessible.

Sheldon Mills, executive director of consumers and competition at the FCA, said: “We expect firms to continue to offer easy and accessible banking services to their customers, and this is even more important as the country faces a cost-of-living crisis.

“We saw firms successfully do this and support consumers through the pandemic, and this standard needs to continue with firms really thinking about their customers, especially those in vulnerable circumstances, and ensuring they continue to meet their needs.”

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “Banks are closing branches, shutting ATMs and changing opening times without fully understanding the impact it has on people locally, or letting them know what’s going on.

“It could be devastating for vulnerable people who rely completely on their branch. The FCA is proposing new rules to ensure they work harder to understand the full impact of what they’re doing.”