Banks announce double-edged simplifying of branch closures
THE British Bankers' Association (BBA) have called for reform of the Access to Banking Protocol, urging banks to inform customers of branch closures as soon as it's feasible rather than wait for the current 12-weeks-before deadline.
Launched in May 2015, the Protocol guides banks on how they should handle local branch closures and on what kind of information they should provide customers of closing branches.
While the BBA's new review unsurprisingly doesn't oppose branch closures in themselves, it recommends changing the Protocol so that banks are required to give more support to customers affected by closures.
Yet despite extra support being an unquestionably good thing, it's arguable that making the Protocol more "streamlined" may only hasten the speed of branch closures.
More help with alternatives
Of course, this is far from being the report's intention, since it advocates a range of measures that will better inform people about the alternatives available to them when their branch closes.
Authored by Professor Russel Griggs OBE, the report has three main recommendations:
- having specially trained staff in branches due to close to help customers with alternative banking methods.
- telling the local community as soon as practically possible after a decision to close a branch is made.
- working more proactively with elderly and vulnerable customers to understand their requirements and to use alternative ways to bank.
Added to this, Prof. Griggs also advises banks to implement measures on: making impact assessments more specific to local communities; making decision-making processes clearer; conducting post-closure reviews to assess impact; and working more closely with the Post Office to overcome some of the customer issues caused by closures.
Another key proposal is his call for banks to announce planned closures to the public as soon as possible, rather than waiting for the Protocol's current deadline of 12 weeks prior. This way, they'll have more time to advise affected customers on relevant alternatives.
According to the BBA, the banks signed up to the Protocol - Barclays, Clydesdale Bank, Co-op Bank, HSBC, Lloyds, Nationwide, RBS, Santander and TSB - will now work with Prof. Griggs to formally update it based on such recommendations.
They expect to finish their work by the end of the year, with the changes coming into effect at some unspecified point in 2017.
And while the proposals could indeed be modified by the time they're actually implemented, they've been cautiously welcomed by customer groups and charities.
Citizens Advice, for one, said in a statement, "The measures recommended in this review ... will mean people are better informed about how bank closures will affect them".
However, just because customers will be better informed doesn't necessarily mean they won't be worse off with the proposed changes.
For instance, in the year between April 2015 and April 2016 - roughly the year after the Access to Banking Protocol was introduced in May 2015 - there were over 600 branch closures.
By contrast, there were 3000 closures in total for the decade leading to April 2016. This reveals not only that the average was 300 over these ten years, but that the total for April 2015-6 was twice the average.
Similarly, in 2015, there were 681 closures, while by the end of the first half of the year alone, 546 branches had shut down.
In other words, bank closures appear to have accelerated since the Protocol was established. As a result, there's a genuine worry that any streamlining and strengthening of it may only accelerate closures further, in the sense that it'd do a better job of exonerating banks of the guilt of closing local branches.
Admittedly, the effect of the Protocol on the increasing rate of branch closures is hard to disentangle from technological changes to the industry. Plus, the BBA and the banks don't provide any systematic, industry-wide data on branch closures, so it's difficult to assess the particular effect of the Protocol with any strong degree of certainty.
This absence of standardised data was something criticised in an October report from the Federation of Small Business, who complained that "[m]onitoring both the extent and impact of these closures is difficult as no standardised data sets exist across the UK banking industry".
They therefore called on the industry to provide greater data disclosure, as a way of demonstrating whether the Protocol actually lessens the impact of closures on affected customers, in terms of loans and other banking services received.
Unfortunately, the BBA's review of the Protocol includes no proposal to make standardised data on closure impacts available to the public, despite calling for "post closure research".
As such, it will fail to provide any credible confirmation of its own effectiveness in helping people make the transition to a world without their local bank branch. It will do nothing to help restore public trust in banks, and even if its likely changes do look helpful on paper, there won't be any reliable way of demonstrating their helpfulness.