Banks should reconsider plans to close branches during lockdown says FCA

Banks should reconsider their plans to close branches during the current coronavirus restrictions, the city regulator has said.

The Financial Conduct Authority (FCA) said some some banks and building societies have said that they are either going ahead with branch closures already announced, or announcing new branch closures during current lockdown measures.

It said: “We are concerned that these activities could have significant consequences for customers.

“It may be harder than usual to reach all customers under the current restrictions and engage with them on closure proposals effectively (for example, small businesses that are temporarily closed).

“Some customers may need to access in-branch services to help them prepare for closures but may be unable to do so. Customers may also need additional help to access online banking and making payments. We want firms to review their plans against our existing guidance and ensure that they continue to comply with our principles.”

The FCA’s principles for businesses require firms to treat their customers fairly and communicate with them in a fair, clear and straightforward way.

It said: “We expect firms to exercise particular care with vulnerable customers.”

It said where firms are unable to meet the expectations of the FCA’s guidance during lockdown measures, “they should consider pausing or delaying new branch closures where possible, particularly where this could have significant impact on vulnerable customers.

“This would be similar to the approach firms took during lockdown measures in 2020.”

Where firms press ahead with planned branch closures, they will be expected to be able to demonstrate how they have taken the FCA’s concerns and expectations into account.

Firms are expected to engage with customers where appropriate, to understand their needs and properly consider how they would be affected.

Neena Bhati, head of campaigns at Which?, said: “Drastic cuts have been made to the bank branch network over the last few years, which have been a huge blow to customers who rely on face-to-face banking.

“The financial regulator is right to ask banks to think again about branch closures scheduled to take place during the coronavirus lockdown, and firms should consider how their individual commercial decisions will impact on people’s ability to carry out tasks such as withdrawing cash, particularly if they are vulnerable.

“However, this temporary move won’t fix the problem long-term. The Government and regulator should not delay legislating to protect access to cash and provide clear direction to firms about acceptable standards of local banking services.”