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Customers must be given 12 weeks’ notice if bank branch or ATM to close

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Banks, building societies and credit unions looking to close a branch, ATM or convert a free cash machine into a paid for service, must inform the regulator and give users at least 12 weeks’ notice.

As part of the finalised guidance published by the Financial Conduct Authority (FCA), it sets out its expectation for regulated firms when it comes to branch closures or converting free ATMs to paid-for ATMs.

Firms must keep the regulator informed of any plans for closures or conversions before a decision is made so that it can monitor whether customers are being treated fairly. They must also provide a clear summary and analysis of the needs of customers currently using the services; the impact of proposals and alternatives to the proposals.

Where a decision is taken, customers must be given a minimum of three months’ notice so that they have time to take action, such as finding alternative services or switching banks.

The guidance applies from 21 September 2020 and comes after data from the 2020 Financial Lives Survey revealed that 11% of UK adults said they rely on cash to a “great” or “very great extent”.

One in 10 said they didn’t know how they would cope, or would not cope at all in a cashless society.

It’s also in light of stark statistics which show more than 3,500 branches have closed over the past five years, averaging 55 branches a month, as banks look for easy ways to cut costs.

Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “Although closures or conversions are decisions for firms to take, it is important they implement these decisions in ways that are fair to their customers.

“Even during the pandemic, cash remains essential to many consumers. The publication of this guidance sets out clearly our expectations on firms and will ensure that firms make it a priority that customers are treated fairly, especially those who are most vulnerable.”

Endangered branch network

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said the measures aren’t enough to safeguard the future of the increasingly endangered branch network.

“At best it’ll give you time to switch to a different local branch, and at worst it will close the last bank in town and offer advice on online banking instead,” she said.

Coles added that the guidance encompasses offering customers help to access online banking – which is a “handy way for banks to get around a commitment to the local area”.

She said: “For banks, this offers the opportunity to close expensive branches with dwindling customer numbers. But for those customers who rely on them, it can make life incredibly difficult. Vulnerable people are far more likely to rely on cash and to struggle to go further afield if a branch is closed. In many cases, online banking isn’t suitable for their needs, so they risk being cut off if their branch or ATM closes for good.

“The only hope on the horizon is that in the Budget in March, the government promised to legislate to ensure people have access to cash. The FCA has said this guidance isn’t intended as an alternative, so it will work with any new legislation. This could mean vulnerable people end up with more protection. It just remains to be seen when the government will actually have time to deal with this issue – given everything else that’s going on – and what’s left of the branch network by then.”

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