My Lords, decisions on branch closures are a commercial matter and are taken by the management team of each bank without intervention from government. However, the Government recognise that branch closures can be disappointing for customers, and believe that the impact on communities must be understood, considered and mitigated wherever possible.
My Lords, I thank the Minister for that reply. Karen Doyle runs a small bakery on the main street of Sowerby Bridge in West Yorkshire, a town that had six banks a decade ago, but the last one closed this July. She told BBC News:
“Bank closures have just ripped the heart out of the town. What really annoys me is that as taxpayers we bailed the banks out when they were in trouble and now they’ve left places like Sowerby Bridge behind”.
Lloyds Bank springs to mind, does it not? Does the Minister agree with the sentiments expressed so cogently by Karen Doyle? She could have added that it is a half-truth that everyone now happily relies on telephone banking. Given that two-thirds of bank branches have already closed, has the time not come for the high priests of the Treasury, instead of washing their hands of this exemplar of creative destruction, to start planning for a bank for regional regeneration? Otherwise, perhaps let it be set up—
I thank the noble Lord for his question. As for the situation in Sowerby Bridge, he will be pleased to know that there is now a much tougher access to banking standard, which was set up by UK Finance following a review by Professor Griggs, and requires impact assessments to be undertaken. He will further be able to reassure the resident of Sowerby Bridge that she has access to the Post Office network—some 11,500 outlets—and that as a result of the banking framework agreement now in place, 99% of personal banking services, and 95% of the small business banking services to which she referred, can now be transacted through the Post Office in Sowerby Bridge. I hope that that will bring some reassurance, and even festive cheer, to the noble Lord and to the bakery concerned.
My Lords, the nearest town to Greetland is Elland. We did have six banks; we now have none. Just up the Calder Valley, as the noble Lord has said, are Sowerby Bridge and Hebden Bridge; they are in the same position. Real hardship to customers, retail businesses and small businesses is a fact. The mighty banks should not treat their loyal customers with such disdain. If I may comment on what the Minister said—
It will be a question, do not worry.
There is a mighty Act, the Financial Services and Markets Act 2000, which is over 300 pages long. Although it makes no reference to branches, there is a regulation-making power in Section 426. I put it to the Minister: could an order be laid authorising the Financial Conduct Authority to give due regard to the need for banks to give proper branch services to towns and communities without banks?
Fair banking principles are upheld currently by the Financial Conduct Authority. I come back to the point that the access to banking standard is now in place, and has been in place since last year. It requires much greater consideration and consultation before branches are closed. Alongside that, the Government have been investing in the Post Office network to the extent of some £2 billion since 2010. Those two factors will, I believe, help address the majority of concerns.
My Lords, I declare an interest as a director of Metro Bank. Are the Government aware of the extent of the services and branches that the new banks are bringing to this country? Metro Bank has just opened its 62nd branch and will continue to add branches. It has gained 1.5 million customers in less than 10 years. My point is that modernisation is happening, and it is often the new banks that are providing what people want.
Modernisation is indeed happening and challenger banks are making a big contribution to the way that banking services are delivered. The reality is that digital online banking is now conducted by 71% of the population. Next year, mobile apps will overtake digital banking in service delivery. That is leading to changes in our high streets, communities and villages. They need to be taken into account, but so too does the changing way in which we pay for services.
My Lords, the banks are closing 12 branches a week and yet those who are taking the decisions at the highest level are undoubtedly enjoying city bonuses which are well over 20% this year. Instead of talking about mitigation, why do the Government not think in terms of some machinery to control the situation and introduce an element of fairness to communities? We believe that banks should be permitted to close only after local consultation and the Financial Conduct Authority has given its assent.
I understand the point about consultation but that was the whole point of Professor Griggs’ review and the new access to banking standard, which is upheld by the Lending Standards Board. We cannot be in the position of asking whether we are going to subsidise five of the six banks to remain open with taxpayers’ money. We have decided to respond by coming up with an arrangement for the Post Office to be the place of choice for people to transact their personal, face-to-face banking needs. I think that that is a better way forward.
My noble friend is absolutely right. The access to cash review by Natalie Ceeney, who is a former member of the Financial Ombudsman Service, will be a critical contribution to our assessment of those factors going forward. I understand that she is due to produce her full review in the spring of next year and we will very much look forward to taking it into account.