In this guide
Banks could be fined if they breach a three-mile radius rule on free cash withdrawals under new guidance outlined by the Treasury. Here we explain what you can do if you branch closes.
Since 2015, bank branches have been closing at a rate of around 50 a month, leaving some communities as cash deserts.
Now banks have been told that they must offer businesses and consumers the ability to deposit money and withdraw cash for free within a certain distance. For those in towns and cities, it is one mile or three miles in rural areas.
Here our consumer champion, Martyn James, explains what you can do if your branch closes.
In this article, we cover:
- Why are so many bank branches closing?
- What do we need bank branches for?
- Can you use the Post Office for banking services if your branch branch closes?
- What are banking hubs?
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Why are so many bank branches closing?
Back in 2001, NatWest ran a major advertising campaign about branch closures featuring an older lady bemoaning the fact that her old local bank was now, indeed, a trendy wine bar. NatWest promised to not close any more branches. That didn’t last.
Towards the end of July, Virgin Money announced it is cutting 39 branches. In total, according to consumer group Which?, around 6,000 bank and building society branches have closed since January 2015 – that’s 54 a month on average.
Banks say that they are responding to the needs of businesses and consumers who are choosing to do their banking online, rather than in their local branch. Critics argue that many have little choice now.
The financial services regulator, the Financial Conduct Authority, has started to clamp down on closures. This includes forcing banks to consult on reducing hours. It could put some closures on hold and has even stated explicitly that branches should not be shut unless there is a “fit for purpose” alternative available.
The government has also outlined new proposals to ensure that everyone is within three miles of a cash machine where they can withdraw and deposit their money.
Yet despite questions in Parliament, protests from every major consumer group, concerted campaigns and direct appeals to the banks, the closures keep coming. So what are your options?
Read more: How much of your savings are safe in the bank?
What do we need bank branches for?
Whenever the subject of branch closures crops up, I get the same response from the industry – and lots of readers too. “No-one uses branches anymore, people do their banking online”
So do we all just need to go with the times and move on?
It’s true that most banking services can be found online, but the key factor here is branches provide essential services you don’t get on the web or through a helpline – especially for those who are vulnerable.
These services include: access to face-to-face guidance, financial advice and fraud protection.
Small businesses are also reliant on cash and in-branch services. There are countless market stall holders and small traders who need counter services to support them with their individual business needs.
But it’s fraud prevention that worries me the most. Bank staff are trained to identify when their customers might have been tricked into transferring or withdrawing large amounts of money.
They can register concerns if they feel someone is being exploited and can freeze accounts when necessary. When branches close, this personal level of service disappears too.
Read more: ‘Why I switched to online banking at the age of 77’
Can you use the Post Office for banking services if your branch branch closes?
Let’s take a look at the alternatives. The Post Office offers an invaluable range of banking services. With over 11,500 branches around the UK, most people will have a branch relatively close by.
The Post Office allows you to carry out most basic counter services like your bank. These include: cash deposits, cash withdrawals, balance checks and cheque deposits.
It also offers a range of other commercial activities, such as savings, investments, loans, insurance, money transfer, foreign currency, mortgages and postal orders, though many of these are own-branded.
The Post Office also offers a document verification service – vital when signing up for some financial products. But, unlike banks and building societies, it charges a fee.
There’s also another problem here. The demands on Post Offices are extraordinary. The more services a business provides, the busier it is. It’s at least a 30-minute wait for the counter service at my local Post Office because of demand. And what if your local branch closes?
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What are banking hubs?
A banking hub works in a very similar way to a traditional bank. But what’s unique is that from Monday to Friday, there is a different representative (a “community banker”) from each big bank or building society that used to operate in the local area – a representative you can speak to about more complicated banking issues.
At present, banking hubs aren’t offering sales of financial products. But as the scheme develops, the teams in each Hub should be able to provide a wider range of services.
I’m a great fan of the banking hub project. In an ideal world it wouldn’t have to exist, but this is the best and only effective solution I can see for the desperate lack of high street branches, short of forcing banks and building societies to reopen branches.
You can request a Hub in your local area
They are here to stay, too. The Financial Services and Markets Bill, which finally got Royal Assent in June, guarantees access to cash for us all – and should compel businesses to be part of the banking hub project as a result.
There are now seven banking hubs open and 69 are due to open or in development. Gareth Oakley of Cash Access UK, the organisation in charge of setting up the banking hubs, told me they have proved (unsurprisingly) to be very busy and popular in the community.
You can request a banking hub for your community through LINK here.
Adrian Roberts from LINK, told me: “We recognise how important access to cash and face-to-face banking services are for consumers and communities. That’s why LINK automatically assesses any community where the last branch closes to see if new services are needed.
“Communities that have already lost their last branch can also ask LINK to assess them. To date, 21 of the new Hubs were agreed as a result of community requests.”
Read more: ‘Can we still get a mortgage if my partner has bad credit?’
A final rant
The destruction of the high street banking branch network is the perfect example of why an industry can’t be allowed to police itself.
Despite endless warnings at the highest level of Government and regulation, the branch network has been ruthlessly gutted and little is being done to ensure that suitable replacements are in place in time.
Banks are supposed to be consulting with the local community before removing the last branch service in towns, but the current rate of closures is really concerning me. I’d like to see all future closures stopped until a new Hub has been developed and is in operation. Why not mention this to your MP?
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