New rules from the FCA to protect access to cash have come into force and are already having a positive impact in local communities, says the watchdog, adopting a stance which has strained credulity in the wake of Lloyds Bank's latest branch closure programme.
Under the rules, banks and building societies must assess whether changes to local services, like closing branches or cash machines, leave local communities lacking ways to take out or pay in cash.
Since the rules were confirmed in July, Link, which manages the UK’s cash access and ATM network, has reassessed the needs of local areas where banking services are changing.
As a result of this, 15 communities, which had not previously been assessed as needing a banking hub, will now get one and six communities will now have an ATM at their banking hub. A further six areas will get an automated deposit service or enhanced Post Office.
Existing services will not be removed before the replacement services are in place. These changes are a direct result of the new rules, says Sheldon Mills, executive director for consumers and competition at the FCA.
"The way we spend money is changing, and far fewer of us use cash day-to-day," he says. "We don’t want to stand in the way of change, but we do want to ensure reasonable access for those who continue to rely on cash. Our new rules are already having an impact, protecting vital services for communities across the country."
The FCA's positivity about the rule changes clashes with the lived experience on the high street and the determination of the big banks to continue to slash their branch networks. Just last week, Lloyds confirmed that it will be closing 292 bank branches across the UK in 2025.
Since January 2015, banks and building societies have closed 6,143 branches, which represents about 62% of the branches that were open at the start of year. In total, 410 closures have been scheduled across 2024, and another 116 have been pencilled in for 2025.
Mark Aldred, a retail banking expert at Auriga, the banking software company, says the rules don’t go far enough and banking hubs, including the 15 new ones announced today, don’t provide a true alternative to what’s been lost and are too basic in the services they offer."
“Whether the FCA rules are enough to protect services is debatable. While there are some improvements in what was originally proposed, there is no serious pressure on banks to retain physical access to cash or how a branch offers wider access to financial services in communities.
He says the number of hubs in the pipeline is dwarfed by the loss of bank branches and the limitations in what a hub is designed to offer. For instance, many of the hubs do not have a printer, leaving customers unable to get paper copies of statements and documents. Nor are they required to have a 24/7 ATM installed.
"Simply having a hub on the High Street isn’t enough. As customers are finding, it is what is inside a hub in terms of access to your bank’s experts when you need them rather than when they are rostered to be available, that’s important," says Aldred. "Like Post Office counters, hubs do not provide a like-for-like replacement of the branch banking services that have been lost."