Baroness Tyler: Financial services play a vital role in our communities, more must be done to keep branches open
Baroness Tyler says more must be done to keep branches open and welcomes Nationwide’s announcement that every town or city in which it currently has a branch will still have one in 2021.
The sight of empty bank buildings on the high street has become all too common. In fact, between 1989 and 2016, 53% of UK bank branches closed. This sharp decline is far greater than any other European country during that time. And this trend shows no sign of slowing down: another 2900 banks closed between 2015 and 2018. These numbers are shocking – but the numbers alone do not properly reveal the impact that a bank branch closure has on the local community. Sadly, those most affected are some of the most vulnerable people in our communities, particularly disabled people, the elderly and those with mental health problems.
Some banks have argued that these closures reflect a shift towards online banking and through closing branches, they are simply responding to the changing demands of consumers. However, while online banking is something many of us may take for granted, it is not accessible to - or wanted by - significant numbers of people. I chaired the Lords Select committee on Financial Exclusion, which explored the barriers that vulnerable people face to access basic financial services and published a report in March 2017 on what needs to happen to remove them. The evidence we received was clear: closing bank branches will worsen financial exclusion for those with difficulties accessing the internet. This includes 42% of disabled people and 93% of those over the age of 80 who are not online.
When combined with physical mobility issues or living in a rural area, closing the local bank branch can mean that banking is next to impossible. This was highlighted in a news BBC article last year, which told the story of one 83-year-old woman with osteoporosis. After the closure of her local bank branch, she was left facing a 30 mile round trip on multiple buses just to access basic banking services. I found these stories of the profound impact of bank closures on the lives of people across the country incredibly moving. After the publication of our report, I received letters from older people and people in rural communities who felt completely abandoned by their banks. Their stories demonstrate the damaging effect that bank closures can have on individuals and their communities.
I find it deeply ironic that the UK is considered a world leader in financial services when its banks fail to provide basic services to so many vulnerable consumers. The necessity of banking services just to be able to function in our society means that easy access to banking needs to be considered a basic right in the same way access to basic utilities is. A fair deal for consumers means the right to access physical banking services for those who wish to do so.
There have been some attempts to stem the tide of bank closures. For example, in 2015 the British Bankers’ Association launched the Access to Banking Protocol. This committed banks to carry out an analysis of the impact of closures on branch users. While well-intentioned, in practice it has failed to stop banks from closing their branches. When our Select Committee interviewed witnesses about bank closures, not a single one could point to an occasion when a bank had reversed a branch closure decision following the protocol process. More must be done to keep branches open. This is why I very much welcome Nationwide’s announcement that every town or city in which it currently has a branch will still have one in 2021 and recognising the importance of human contact for many of its customers.
Even in situations where it is impossible to keep the last bank branch open in a locality, surely it is not beyond the wit of these institutions to come to some collaborative arrangement? In towns and villages where every single branch has closed down, why can’t the banks collaborate to keep some sort of banking presence available? Even if it is just for a few afternoons a week in the local community centre, it would have a profound impact on disabled and elderly people in the community who cannot bank otherwise. It would also show that the banks are stepping up to take their responsibilities towards all their customers seriously.
Baroness Tyler of Enfield is a Liberal Democrat member of the House of Lords.