FCA Considers New Regulations To Block Branch Closures

New report claims FCA could block further branch closures in the UK

August 12, 2021
FCA Considers New Regulations To Block Branch Closures
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The Financial Conduct Authority (FCA) is considering creating new regulations that would allow it to block banks from closing their branches, if it was deemed necessary to ensure that customers had easy access to their money.

According to the Financial Times, the new regulations could be put in place as part of a wider plan from HM Treasury. The plan is to ensure that customers have easy access to their banking facilities, which could be deemed to include face-to-face banking and not just a digital offering alongside ATMs.

The FT’s report claims that the new powers would allow the FCA to step in and force banks to keep branches open if they decided that there were not sufficient face-to-face banking services in place.

Branch Closures Continue For Many

The reason that the new legislation is being considered is because more banks are choosing to close down branches. The official line from the banks is that customers are moving away from traditional in-person banking and are transitioning to digital services. However, there are concerns that the banks are actually the cause of this behaviour and that there are many customers who would be left behind by such a move.

Banks began to close branches all the way back in 2008, as the global financial crisis causes banks to evaluate their costs and try to reduce spending. The COVID-19 pandemic has massively accelerated the move, with banks justifying the closures in with reduced footfall figures, although it is unclear how much of this could actually be attributed to health fears during the pandemic.

Most recently, Lloyds Bank has announced 44 more branches than already planned this year, while HSBC has announced that 82 branches are to close. At the same time, other banks such as Tesco Bank and M&S Bank are closing their current account offerings, forcing customers to find an alternative option – and with branches closing they may have limited options if they prefer face-to-face banking.

Europe Seeing Similar Impact

This is not just a UK-based trend. Across Europe, many of the largest banks are also closing hundreds of branches in a bid to cut costs.

In France, the Societe Generale bank is merging its retail business with its Credit du Nord subsidiary, which is resulting in 600 branches closing, a significant portion of the 2,100 it currently has open.

Germany’s second-largest bank, Commerzbank, is closing over 340 of its branches and making around 10,000 workers redundant, in a move it has admitted is related to cost-cutting. Sweden’s Handelsbanken is closing half of its branches, while BBVA in Spain is closing 480 branches and making over 2,000 staff redundant, in a move that it estimates will save around €250m a year.

The FCA wants to protect UK customers who are not digitally literate and who do not have easy access to a branch in person. One potential solution that independent companies are exploring is the idea of shared branches, which rotate between the major banks on different weekdays.

Ian Lewis
Ian Lewis
Ian is an experienced writer with 15 years’ experience working in journalism and marketing. He’s worked in-house in financial institutions as well as writing freelance pieces for a variety of banking and financial trading websites.

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About Lloyds Bank Lloyds Bank is a British retail and commercial bank. One of the ‘Big Four’ clearing banks, it was founded in Birmingham in 1765. It is the largest retail bank in...
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About M&S Bank Marks & Spencer Financial Services PLC trades under the name M&S Bank. It is a UK-based retail bank, formed as the financial services arm of Marks & Spencer in 1985...
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Part of one of the world’s biggest supermarket chains, Tesco Finance was launched back in 1997. The Head Office is based in Edinburgh, and although there were bricks and mortar branches...
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About HSBC Bank HSBC is a British banking and financial services company. It is the largest bank in Europe and the seventh largest bank in the world. The bank originated in Hong Kong...
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