FCA updates guidance for banks considering branch or ATM closures

The industry must make sure they are supporting people and businesses who rely on cash and banking services, the Financial Conduct Authority said.

Alternatives to bank branches should be delivered quickly and as a priority, according to the City regulator, which has published new guidance for those considering closing branches or ATMs (Anthony Devlin/PA) (PA Archive)

Alternatives to bank branches should be delivered quickly and as a priority, according to the City regulator, which has published new guidance for those considering closing branches or ATMs.

The Financial Conduct Authority (FCA) guidance, which already sets out expectations for banks to carry out thorough checks on the impact that permanent closures will have on customers, has been extended.

It now covers partial closures, such as removing counter services or permanently reducing opening hours in a way which would have a significant impact on customers.

For example, reducing opening hours on a busy morning might result in a relatively small change in hours, but could have a significant impact on customers’ ability to access branch services.

The conversion of free-to-use ATMs to pay-to-use ones is also included in the guidance.

We’ve published updated guidance for banks that are considering branch closures and reminded them that we want alternatives, such as banking hubs, delivered quickly and as a priority

Sheldon Mills, FCA

The FCA said where the need for an alternative is identified, firms should make sure it is in place and accessible before a branch closes or an ATM is converted. This change to the guidance will help prevent customers from being affected by a gap in service.

The regulator said since it started supervising firms’ closure plans in 2020, it has seen evidence of good practice, such as firms actively considering what alternatives are available and taking into account customers’ needs.

Where firms have fallen short of expectations, the FCA said it has asked for closures to be paused or other options to be put in place.

Sheldon Mills, executive director consumer and competition at the FCA, said: “The industry must make sure they are supporting people and businesses who rely on cash and banking services.

“That is why we’ve published updated guidance for banks that are considering branch closures and reminded them that we want alternatives, such as banking hubs, delivered quickly and as a priority.”

Banking hubs enable several banks to share facilities in the same place.

The FCA’s 2022 Financial Lives Survey (FLS) found around a fifth (21%) of adults with a day-to-day account had regularly used a particular branch over the previous 12 months.

People who were most likely to regularly use a branch included those with characteristics of vulnerability, such as those in poor health (27%) and those in financial difficulty (27%).