Banks defy watchdog’s plea – and just carry on shutting branches

The City regulator’s call for banks to reconsider their decision to axe branches during lockdown has fallen on deaf ears. 

Barclays, Lloyds and TSB have all confirmed to The Mail on Sunday that their plans to shut between them more than 160 branches in the first three months of this year will not change as a result of the regulator’s appeal last week. 

They argue that lockdowns during the pandemic have irrevocably changed the way most people now do their banking, resulting in reduced demand for branch-based services and greater take-up of mobile and online banking. 

But those campaigning for wide spread access to cash on the high street beg to disagree. On Friday, Natalie Ceeney, chair of a key report on access to cash, said that ‘banks removing such a core part of the cash and banking infrastructure would seriously affect the viability of many high streets’.

 She called on the regulator to draw up urgent plans with the banks to ensure nationwide access to cash. 

In its statement last week, the Financial Conduct Authority said it was imperative that banks should consider the effect of any branch closures on customers – and where necessary pause or delay closures where there could be a ‘significant impact on vulnerable customers’. 

But none of the banks that have already announced their intention to close branches this year say they will now pause their plans. 

TSB, the country’s seventh largest bank, has no intention to halt its branch closures that will result in some 80 branches being shut in the first quarter of this year – and about the same again later in 2021.

TSB believes its closures comply with all the guidelines laid down by the regulator – in terms of contacting impacted customers well in advance. 

Since the start of the pandemic in March last year, TSB’s branches have been quiet and product sales in branches (for example, current accounts and mortgages) now account for only 20 per cent of all sales – compared to 80 per cent five years ago. 

TSB has on average 10,000 customers per branch, below the average for all UK banks of 20,000. Even after all its closures, it will stand at 17,000. 

Once the closure programme is complete later this year, TSB will have 290 branches and 480 cash machines, compared to 454 and 655 respectively at the end of last year. 

On Friday it said: ‘TSB is committed to a national branch network. We are working closely with stakeholders to ensure we support our customers through these changes, particularly in the current environment.’ 

Lloyds Banking Group is closing 56 branches in March and April. On Friday, it told The Mail on Sunday that these closures would still go ahead – having previously been earmarked for closure last year. 

It said: ‘We retain our commitment in respect of branches, which is to maintain the largest market share on the high street. Branches remain a vital part of how we serve our customers and we have 1,600. We do not make the difficult decision to close any branch lightly and this is always driven by customer behaviour and branch usage.’ 

Barclays said: ‘We are in regular dialogue with the FCA regarding our approach to branches and on how we’re compliant with its branch closure guidance.’ 

Earlier this month, HSBC said it would be closing 82 branches this year with the first batch earmarked for the axe in late April. In light of the regulator’s announcement, it said it would keep the timing of the closures ‘under review’ and ‘amend them as necessary’.

It added: ‘We are extremely mindful of the impact branch closures have on individuals and communities and we do not take these decisions lightly. 

‘We work hard to ensure our customers are given clear information about what is happening and their options going forward.’ 

Derek French, a longstanding campaigner for a nationwide network of shared branches, describes the FCA’s latest guidance to the banks as ‘weak’ and full of ‘get-out phrases’. 

He believes the banks are able to justify their closures to the regulator by pointing to the availability of nearby alternative banking services – usually provided by a local post office. 

But he says such services often cannot cope with the extra demand caused by bank closures.

‘I have no evidence the FCA has tightened up on the rules governing closures,’ French says, ‘and this latest weak plea confirms it.’ 

…and they want cashless society, say consumers 

Research conducted by cash machine operator Cardtronics indicates that 70 per cent of people believe high street banks are intent on turning the UK into a cashless society. 

The survey results come as the regulator debates the raising of the purchase limit on contactless cards from £45 to £100. A year ago, pre-pandemic, it was just £30. 

Marc Terry, a director at Cardtronics, believes the findings discredit the argument often put forward by the banks that they are only responding to changing consumer behaviour when they close branches or axe cash machines. 

He says: ‘Consumers have cottoned on to the fact that the banks’ agenda of digitalisation is what is really causing the drop in cash use.’ Since the pandemic in March last year, many retailers have stopped taking cash. If the £100 limit on contactless payments gets the go-ahead, it is likely that more retailers will adopt a card-only policy. 

Last March, the Government said it would legislate to ensure high street access to cash. But distracted by the impact of coronavirus on the economy, it has yet to do so. 

Consumer group Which? has just written to the country’s largest eight banks asking them to ‘publicly’ commit their support to the national network of cash machines operated by Link – as well as the post office banking service. Recent research by Which? suggests that nearly ten million people are not ready – or able – to give up using cash.