The City regulator has asked banks to reconsider branch closures during the coronavirus lockdown as these could have “significant consequences” for vulnerable customers.
The Financial Conduct Authority (FCA) said that banks should consider the impact of the coronavirus restrictions on their ability to comply with regulatory guidance on closing branches, which include treating customers fairly and consulting vulnerable and hard-to-reach customers.
In September, the City watchdog introduced a new requirement on banks to assess customer needs carefully and consider the availability and provision of alternative arrangements, such as online banking, where closures or conversions are planned.
Under the guidance, the FCA expects banks to ensure vulnerable and hard-to-reach customers are aware of the proposals and are able to contact banks. The regulator also called on banks to engage with customers, where appropriate, to understand their needs and consider how they will be affected by branch closures.
The regulator said that banks should consider pausing or delaying new branch closures if they are unable to comply with the guidance.
The FCA said: “We are concerned that these activities could have significant consequences for customers. It may be harder than usual to reach all customers under the current restrictions and engage with them on closure proposals effectively.
“Some customers may need to access in-branch services to help them prepare for closures but may be unable to do so. Customers may also need additional help to access online banking and making payments.”
Some of Britain’s largest banks announced plans to shut branches after the pandemic accelerated the shift to online banking and a drop in footfall.
Last week, HSBC said it planned to close 82 UK branches this year.
In response to the FCA’s statement, HSBC said: “We set out our plans last week to evolve our branch network to make it sustainable for the long term, which included the branches we are closing this year.
“We are extremely mindful of the impact branch closures have on individuals and communities and we do not take these decisions lightly.”
The bank also said that it will work hard to ensure customers are given clear information. “Our first branch closures are planned for April 23 but, like we did last year with our branch closures, we will keep the timings of these under review,” it said.
Lloyds Banking Group, which earlier this month announced plans to close 56 branches in March and April, said: “We do not make the difficult decision to close any branch lightly and this is always driven by customer behaviour and branch usage.”
Banks must rethink branch closures, FCA says