New agreement won't halt bank branch closures

Some 479 bank branches closed their doors for the last time in 2014 - double the number in 2013. According to the Campaign for Community Banking Services, 124 of these had been the last remaining banks in their community. Vince Cable is celebrating the signing of a new deal with the banks, which will force them to assess the impact of any possible closure before they shut a branch down. However, this falls a long way short of what many people were hoping for.
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The deal

The agreement is the 'Access to Banking Protocol"'. drawn up by Cable and the British Bankers' Association, which says lenders will have to provide 12 weeks' notice of any plans to close a branch, and publish an assessment of the likely impact on customers.

The report will take into account the proximity of the nearest alternative branch - and will assess the age profile of customers in order to establish how easy it will be for them to travel to another branch.

It will also look at possible alternative banking options they can provide. These could include installing a new cash machine, establishing an arrangement which will allow customers to use Post Office branches, and operating 'Banks on Wheels', to cover those areas not served by branches.

The government seems pleased

Business Secretary Vince Cable said: "Banks have a duty to ensure that all their users and especially vulnerable customers, small businesses and those in rural communities can continue to access over the counter banking services. People are increasingly banking online, but it's not necessarily an option for everyone and we must ensure people are not left behind. This industry agreement recognises those concerns, commits to finding alternatives and is a major step forward."

Anthony Browne, Chief Executive of BBA, said: "Today's ground-breaking agreement will make sure customers still have banking services close at hand if a branch closes. Communities will be given fair notice of any closure and clarity about the alternative places and ways to bank. This includes the Post Office, which is an ideal shared service for customers who prefer to use counter services. The agreement will also make sure there is the right support to help customers use internet or mobile banking."

But this deal is a huge disappointment

However, while everyone sounds terribly pleased with the deal, there's not very much to be pleased about, because the agreement is toothless. In the final analysis, it will be up to the banks to decide whether it is commercially viable to operate a branch, and they will be free to close any branches they see fit. They may have to explore possible alternatives, but there's no requirement to actually provide them.

It falls a long way short of what the government was pushing for: a pledge to keep banks open when they are the last one remaining in the community. It could therefore herald another flood of bank branch closures.

But what do you think? Do banks have an obligation to provide services to people in rural communities, or is it unfair to expect them to run a branch that's losing money? Let us know in the comments.

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