The leader of the Scottish Conservatives has criticised banks for being “tone deaf” in their approach to maintaining a branch and ATM network across the country.
In a session of the Scottish Affairs Committee yesterday afternoon, Douglas Ross grilled UK Economic Secretary John Glen about plans to ensure more remote communities are not left without adequate access to cash.
He asked about the mechanisms being put in place to ensure the views of local people are listened to and taken seriously, rather than it just being a “tick box exercise”.
Glen said: “Local opinion can’t totally overwhelm every factor, if you can get a petition to a certain level you can force things, bu it is about how the market is behaving and how a branch is used.”
Last week, the UK Government announced rules which grant the Financial Conduct Authority (FCA) new powers over the UK’s largest banks and building societies to ensure that cash withdrawal and deposit facilities are maintained.
Glen explained that an additional framework outside of existing legislation will be for the regulator and cash network LINK to discern and “set out”, although he insisted it was a mechanism that would hold the banks to account with full transparency.
Ross hit back, referring to his local constituency in Forres, Moray, stating that the banks claim people are being heard, but once a decision is made to move out, the views of locals are “easily dismissed”.
This exchange led Glen to reveal that he has no intention to create a veto for the government and that the “proportion of a smaller community needs to be carefully considered”, adding that the legislation seeks to maintain a “broad and minimal standard to access”.
He noted that recent changes mean that people can still get cash at the post office, banking hubs and via cashback at retail stores.
Responding to questions over the importance of maintaining 'the last bank in town', Glen said such promises were set out by the coalition government, arguing that this was “never sustainable over a long period of time, because it was completely unaffordable in terms of what was actually happening with the speed of the decline in use of cash”.
Ross asked Glen about the size of population required to get a banking hub, after he was told by the Royal Bank of Scotland that Forres did not meet the requirements.
Glen explained that density of the population and existing points of access to cash were considered, adding: “There is an appeal mechanism that is there to say things might change over time - the details of this are for LINK and the FCA to look at - there needs to be some area of judgement where no bank is prepared to maintain a branch due to the behaviour of customers over time.”
He continued: “I don’t believe that banks sit down and try to depopulate their bank branch networks - I think there are areas of customer convenience around using online banking services.”
The UK Government passed legislation to enable the widespread adoption of cashback without a purchase as part of the Financial Services Act 2021.
Last month, Westminster also announced its intention to legislate to provide the Bank of England with the powers necessary to ensure the UK’s wholesale cash infrastructure - which includes the network of cash centres integral to the sorting, storing and distribution of notes and coin - remains resilient and sustainable, and continues to support access to cash across the UK.
These powers will be legislated for in the upcoming Financial Services and Markets Bill.
In December, the sector announced that it had developed a voluntary industry model that accounts for the different types of facility that provide cash access, including initiatives to provide shared services, to protect access to cash.
Under the model, a coordination body assesses the cash needs of local communities and makes recommendations for alternative services to be put in place as appropriate. The government intends to enable the Treasury to designate cash coordination bodies for FCA oversight.
This has been facilitated through the Cash Action Group, which was convened by UK Finance and consists of major retail banks and building societies, consumer groups, Post Office and LINK.
Don't miss the latest headlines with our twice-daily newsletter - sign up here for free.
