FCA's consultation on Branch and ATM Closures or Conversions: Updated Guidance for Firms - Which? response

Which? welcomes the opportunity to respond to the FCA’s consultation on ‘Branch and ATM Closures or Conversions: Updated Guidance for Firms’ (GC22/2).

Banks and building societies continue to close branches at a rate of around 54 each month. The FCA’s guidance plays an important role since it helps to ensure affected customers are treated fairly and are supported in any transition, in line with the FCA’s consumer protection objective. It is therefore imperative that the regulator’s guidance is clear to both firms and customers, and is regularly updated to ensure it remains relevant and reflects current practices.

We are pleased the FCA is assertively supervising how firms are complying with its guidance on bank and ATM closures and how they are taking account of its Principles and other relevant material, such as its ‘Guidance for firms on the fair treatment of vulnerable customers’. We encourage the FCA to continue this proactive approach when it assumes responsibility as the lead regulator for protecting access to cash, as proposed by Government.

The updated Guidance seeks to reflect the good and poor practice the FCA came across during its supervisory work. We would encourage the FCA to further promote the work it conducted in this area, and would suggest that the updated Guidance should include direct links to this material since it provides additional examples of policies and practices which firms may find instructive.

We are supportive of the FCA’s proposals to extend the definition of closures to include partial closures, to confirm the guidance may apply to new delivery models, to request commercial analyses undertaken where a closure is proposed, to extend the list of stakeholders that are proactively contacted about closure plans, and to remind firms of the relevance and importance of the FCA’s ‘Guidance for firms on the fair treatment of vulnerable customers’. These changes help to clarify the FCA’s expectations of firms and, if firms respond positively, offer the prospect of mitigating some of the consumer harm which can emerge when a bank makes the decision to close a branch. Below we also make a number of suggestions to further improve and strengthen the Guidance.

Looking further ahead, the Government has announced the forthcoming Financial Services and Markets Bill will include provisions to protect access to cash, and it intends to appoint the FCA as lead regulator to ensure the continued availability of withdrawal and deposit facilities in local communities across the UK. There will clearly be some overlap between the FCA’s proposed role in protecting access to cash and its Guidance for Firms on Branch and ATM closures or conversions. We expect the guidance to be updated to reflect the FCA’s enhanced role and, in carrying out this task, the FCA should not merely replicate the existing processes developed by the Cash Action Group, and implemented by LINK. Rather, it should consult with consumers and their representatives to enhance the content and clarity of the criteria used to determine whether a closing bank branch or ATM should be replaced, and to increase the transparency of the local area assessments which are undertaken but which are not currently published. In our view, greater levels of transparency are essential to ensure that assessments of local communities’ cash needs are carried out fairly and applied consistently to deliver good outcomes, whilst also enabling consumers and small businesses, as well as their representatives, to have confidence in the processes. We would be happy to discuss these points with the FCA as it considers how it will carry out its future role as lead regulator for protecting access to cash.