Face-to-face Banking Services

Question

Asked by

To ask His Majesty’s Government what steps they are taking to ensure communities have access to face-to-face banking services.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In so doing, I am sure the whole House will want to join me in wishing Garter King of Arms, this being his last Introduction, a very happy retirement and all best wishes.

Hear, hear.

The Government are committed to ensuring that people who need face-to-face banking can continue to access essential services. Therefore, the Government have commissioned an independent review into access to banking services to assess whether the change in branches is causing detriment, and to whom. The Financial Services and Markets Bill also includes a power to enable the Government to act, if necessary, to protect access to banking services should evidence from the review support intervention.

My Lords, I welcome the Minister’s reply, as well as the Government’s Access to Banking Services review and the powers they have committed to taking through the Financial Services and Markets Bill. Everybody knows the negative impacts that the denial of face-to-face banking has on communities, small businesses and vulnerable people, and especially on many elderly people, blind people and those who cannot and do not use online banking. People in this country bailed out the banks at a critical time and are looking to the Government to ensure that the banks are there for them at their point of need. As the Government look towards the review at the end of this year, will they consider taking greater statutory powers to safeguard in-person banking face to face, as they have done with protecting access to cash? Will they also continue to encourage and facilitate the rollout of shared banking hubs—there are over 230 now across the country—which are very important in tackling this issue?

I thank the noble Lord for that question. We must take into consideration that 93% of adults now use online banking, but the Government still take access to face-to-face banking seriously. We have set a target of 350 banking hubs across the country through this Parliament, and 239 are already operational—including seven in Northern Ireland—with more in the pipeline. The figure of 350 is not a ceiling, and there is the potential for more to open, including in Northern Ireland. The Access to Banking Services review is currently in consultation, is open to the public and, I understand, is very popular. The consultation is attracting a lot of attention, and I therefore encourage the noble Lord to send comments to the review via the Government’s website. They would love to hear from him and, in fact, from every other noble Lord.

My Lords, the tech companies are rapidly moving into the banking space—digital money, wallets, payments, payroll, savings and investments. Will the Government insist that these tech players contribute to the costs of interoperability, inclusion and face-to-face services, and not get a free ride?

The noble Baroness raises a valid point. We must wait for the results of this review to see what it says. It is important that we have an enabling clause in the Financial Services and Markets Bill, and that we are able to implement the recommendations of that report as soon as possible.

My Lords, I declare an interest as someone who has had two bad experiences with banks recently. The first was in a personal capacity when ringing the Barclays call centre. No one would give their name or number, and so they lost the business: it was frustrating. The other experience was as chairman of an SME, which was going through its KYC for the directors. We had to go through Revolut’s automated bots and software, and it cost the company a vast amount of money. No real person would talk to us; five or six emails were never replied to. That too was a bad experience. What more can the Minister do to persuade these banks to take small businesses more seriously?

I refer back to the review that has taken place into access to banking services. We are encouraging small businesses, and the business sector that will use the review, to get involved with that consultation and raise the issues the noble Lord has mentioned.

My Lords, I wonder whether my noble friend is aware of the recent Age UK survey. It notes the relatively large number of elderly people who do not like using digital access for banking, but who are using it for shopping. The international evidence is clear: the more you make banking and other digital access to public services safe and easy, the more people will willingly participate. Is that not the message the banks need to understand?

The noble Baroness makes a very valid point. We need to encourage the banks to look at what their customers require. Some 93% of the adult population who have a bank account do their banking online, while 26% of UK adults used a bank branch in the 12 months to May 2024. We need to have an open mind about what else we can do to access and reach out to people. We have more than 10,500 post offices that can be used, and we can use ATMs in areas where there is no banking. There is a whole host of things that we can do. We just need this review to come up with recommendations for the Government to implement as soon as possible.

My Lords, the closure of bank branches presents a case study in increasing regulation and declining service. The regulations were put in place to preserve access to retail banking. Will the Minister commit to reviewing the overarching settlement for banks in the UK to ensure that retail banking does not decline any further?

We do not want to see retail banking declining further. We need to take into consideration the changing way in which people use their banks. A lot of banking is now online, but a lot of people still need access to a banking hub, a bank on the high street, or a post office. We need to make sure that all the points the noble Lord raises are taken into consideration.

My Lords, as part of the banking review, can my noble friend the Minister outline what help can be given to credit unions? They are a form of banking that provides face-to-face services, particularly to those in disadvantaged communities. I note that there is a section in the Financial Services and Markets Bill that could help their further development.

The noble Baroness is absolutely right about the part of the Financial Services and Markets Bill that refers to credit unions. We want to expand the use of credit unions. About 1.5 million people across Great Britain use credit unions or financial co-ops. Our reforms will make it easier for the 220 credit unions in Great Britain to attract more members, allowing millions more people to potentially benefit from the expansion. This supports the Government’s ambition to double the size of the mutual sector, as credit unions are deeply embedded in their communities. I know that the role of credit unions is devolved in Northern Ireland, but I also know that the Treasury has been speaking to the Executive about what we intend to do in the rest of Great Britain. In Northern Ireland, there are over 100 credit unions.

I thank the Minister for indicating that there may be further banking hubs in Northern Ireland. Rurality is a big issue in Northern Ireland. When we tried to attain a banking hub in my local town, the answer that came back was that there were not enough customers, but that is because we live in such a rural area. Has the Minister had any thoughts about rural proofing what comes forward in relation to banking hubs?