Senedd Spanks The Banks

The World's Local Bank?
(Pic : Wales Online)

In what looks set to be the penultimate topical members debate of the Fourth Assembly, yesterday AMs discussed bank closures. I'll come back to another interesting and topical debate later this week.

Like school, post office and library closures, bank branch closures are often very controversial in the communities affected by them – particularly rural areas, but some urban ones too as demonstrated recently by HSBC's decision to close their Aberdare branch; Aberdare being a sizable town of ~30,000 people.

In their motion for debate, AMs called for :

• The Assembly to deplore the closure of bank branches, particularly in cases where such branches might be the last one in a given area.
• Banks to consider the impact closures have on their respective communities.
• Banks to carry out a full consultation with interested local groups before going ahead with a branch closure.
• The UK Government, Welsh Government and Financial Conduct Authority to consider the impact of bank closures when formulating economic development and financial regulation policies.

Julie Morgan AM (Lab, Cardiff North) started of by saying the large number of signatories to petitions when banks propose closures shows strength of feeling (clip). Since 1988 the number of banks in the UK has fallen from 20,583 to just 8,873. In Wales, there are estimates that 108 branches have closed in recent years with further closures forthcoming; thirty communities have no bank branch at all.

Julie said there was a clear impact on the elderly, small traders and small charities who deal with cash, while the impact statements used to determine the effects of a closure make no impact whatsoever on the decision. Julie called for more independent scrutiny of customer numbers and a presumption against closures if a branch is the only one left in a community.

Darren Millar AM (Con, Clwyd West) said that while AMs had dealt with it in casework, the issue had been overlooked by the chamber as a whole (clip). In his own constituency, HSBC closed a branch in Kinmel Bay which is home to around 8,000 people and now has no bank. He said rural communities were harder hit because if the last branch closes customers have further to travel. Darren also raised the issue of restricted opening hours in addition to closures, and lots of people like a face to face service. Banks are also important for tourist access to cash.

Mike Hedges AM (Lab, Swansea East) described the situation on Morriston's Woodfield Street, where it was once claimed there were too many banks and building societies, but that's been reduced from five to two (clip). Complaints about closures were almost always ignored and campaigns have never worked; sometimes communities aren't even left with an ATM. Empty bank buildings will likely remain empty for some time, as it's difficult to change use from financial services to retail.

Rhun ap Iorwerth AM (Plaid, Ynys Môn) said bank closures were a huge blow to any community, forcing people to change bank accounts – citing decision sin Menai Bridge and Amlwch (clip). Rhun found it difficult to understand why banks close branches as there's some uncertainty over post offices as well. This is compounded in rural areas because of poor internet access issues. He proposed that banks use profitable branches to cross-subsidies less profitable ones in the same way as mobile phone masts.

Kirsty Williams AM (Lib Dem, Brecon & Radnor), as a rural constituency AM, cited numerous closures in her own area, with at least four more on the way (clip). Banks had done nothing to rehabilitate their image after the economic crisis and have forgotten what the public have done to assist them. She accused banks of passing the buck to post offices with little regard of whether they can pick up the slack, while cashpoints are the only 24 hour access to free cash withdrawals. When discussing the Access to Banking Protocol (pdf) with a HSBC official, Kirsty revealed the official didn't even know it existed.

Mark Isherwood AM (Con, North Wales) was afraid rural areas are taking the brunt – and counted as discrimination against people without internet access and who couldn't drive; as a former banker he said there's a need to take a customer-facing approach (clip). He explained the provisions in the Access to Banking code in some detail, but quipped that a branch which featured in a Natwest advert that proclaims they would keep the last bank in a community open....has closed.

Jeff Cuthbert AM (Lab, Caerphilly) – and, via an intervention, Sandy Mewies AM (Lab, Delyn) – said banking was a public service and people had a right to access their own money (clip). Another Banking sia public service and people have right to access to their own money. Another HSBC branch in Bargoed relocated to Blackwood, which is only five miles away, but because of the topography it's difficult for constituents to make the journey sometimes, particularly by public transport, so it's had an impact on footfall in Bargoed since regeneration.

Leanne Wood AM (Plaid, South Wales Central) said people had campaigned vigorously against closures in Rhondda, where customers in Treorchy and Porth will soon have to travel to Pontypridd (clip). Even if these people are fit and healthy or have car access it'll still be a problem, and it's even more difficult for people who live towards the top of the two Rhondda valleys. She used an anecdote from a trader who said they "can't internet bank their change".

Russell George AM (Con, Montgomery) said HSBC were planning two closures in his area, alongside three or four others in just the previous two years (clip). He expressed frustration that banks don't change their mind despite local campaigns and meetings – it's always a "no"; he's yet to know of any successful campaign to keep a bank open. Russell explained that he's carried out his own customer surveys and the results were often different from the official ones, which massively underestimate customer numbers and use selective data.

In reply on behalf of the government, Business & Economy Minister, Edwina Hart (Lab, Gower) – a former banking professional – said she fully understood the issues as a minister and as a constituency AM (clip).

The financial crisis placed a downward pressure on banks to cut costs, and there's been a 30% fall in people visiting branches between 2012-2015; but the anecdotal evidence is different. There also a social and economic cost to communities as jobs are lost and decisions over things like lending are taken much further away. While Edwina said post offices provide an excellent range of services as an alternative to bank branches, there's little to no consultation with managers.

Wrapping up the debate, Aled Roberts AM (Lib Dem, North Wales) said that frustration was the theme running through the debate, as it's been a problem for about 20 years but is speeding up (clip). It was ultimately a UK-wide problem, but politicians have been unwilling to move to a system of regulation; voluntary protocols have been tried, but they clearly don't work.

Aled said one major problem is that decisions on closures are taken centrally in London, something that wouldn't happen in Germany where such decisions are taken locally.

The motion was unanimously agreed.

One of the big issues raised by AMs if the burden placed on post offices
when local bank branches close - often with little consultation.
(Pic : Daily Post)

HSBC – "The World's Local Bank™ " – doesn't come out of this particularly well, but they're all at it.  Ultimately, the only way you'll get them to listen is by voting with your wallet, the problem there being who to switch accounts to when branches close left right and centre. The Post Office do, of course, offer their own basic bank accounts.

Even in Bridgend, while there's no threat of bank closures as far as I know (I think all the ones in outlying villages have already shut), there's been a trend towards replacing face-to-face services with machines (for paying-in and dealing with things like bills) – it's probably the same elsewhere too and it's inevitably going to cost jobs.

As most of the AMs said, when banks shut the pressure transfers to post offices. In some ways that might be a good thing as it makes post offices indispensable to communities and will help keep them open, but it might be daunting for customers who could question whether transactions are being carried out properly. It's not really fair to blame the Post Office if something went wrong, but that's what would happen.