FCA warns banks on branch closures during crisis
The Financial Conduct Authority has warned UK banks not to close branches if doing so would harm vulnerable customers during the Covid-19 lockdown.
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The regulator said banks should treat customers fairly, communicate clearly and take extra care with vulnerable customers.
Some banks and building societies have told the FCA they are going ahead with planned branch closures or intending to announce extra closures during the lockdown.
The FCA said it was concerned banks would not be able to contact small businesses that are temporarily closed and other customers to tell them about closures. Some customers may not be able to visit branches to get ready for the closure or may need extra help with online banking, the regulator said.
“Firms should consider the impact of branch closures on customers,” the FCA said. “Where they are unable to meet the expectations of our guidance during lockdown measures, they should consider pausing or delaying new branch closures where possible, particularly where this could have significant impact on vulnerable customers.”
The FCA’s instructions could affect HSBC, which said on 19 January it would shut 82 branches in 2020 starting in April. Other banks have also been shutting branches as the crisis has accelerated the shift to online banking.
TSB said in October it would shut 164 sites in 2021, leaving it with 290 branches. Lloyds Banking Group paused closures earlier in the pandemic but plans to scrap 56 branches from April. The FCA’s warning could affect these banks' plans.
Lenders shut more than 3,000 branches in less than five years to August 2019. Campaigners argue closing branches harms people who are old, isolated or on low incomes and are more likely to use cash and bank in person. With interest rates at rock bottom and customers moving online banks are keen to scrap more sites to cut costs.
The FCA said if lenders did go ahead with closures they should be able to show they have applied the FCA’s principles on treatment of customers. If they announce new closures, banks should communicate with customers clearly, help them adapt and understand how a branch closure will affect them.