42.In 2015 the major high street banks signed up to an industry-wide agreement on how to manage bank branch closures, which was developed with support from the Coalition Government. This “Access to Banking Protocol” was reviewed in 2016 by Professor Russel Griggs whose recommendations were incorporated into the current Access to Banking Standard, which has applied since 1 May 2017. The overarching principle underpinning the Standard is that:
Customers and relevant stakeholders of a bank branch that is closing will be provided with clear, understandable, accessible documentation and information about that specific closure as soon as the bank is able to do so, also what it will mean for them and how they can continue to bank following its closure.
Since July 2017 the Standard has been overseen by the Lending Standards Board (LSB). We explore the role of the LSB in more detail later in this chapter.
43.The Standard places several obligations on banks who have decided to close a branch. These include:
The Standard also requires banks to communicate with customers and stakeholders between the closure announcement and closure date, including contacting vulnerable individuals and responding to concerns that have been raised by stakeholders, and to provide support after a branch has closed.
44.Liz Thompson, Head of Compliance at the LSB, provided more information about the impact assessments that banks are required to produce and publish when branches are due to close. She said that “what the firms will likely do is produce one template document. That should have information that is relevant to the branch that is closing—where the nearest post office is, where the nearest other alternative bank is and so on”. She continued that the impact on customers was “looked at from the point of view of how far the customers are going to have to travel to the nearest branch. Therefore, it is the impact on their ability to continue to do their banking.”
45.RBS has published “help and support for personal and business customers” documents for each branch due to close, which appear to be intended to fulfil the requirement of the Impact Assessment described in the Standard. These documents contain a mixture of general information about the reasons for closures together with tailored information about the nearest remaining RBS branch, Post Office branch and cash point. In February some of these assessments were updated with more information about the number of regular customers using a branch.
46.A number of witnesses have been critical of the quality of information in these documents. Lyn Turner, from Unite Scotland, told us:
I read impact assessments on a monthly basis with local authorities and it is far from an impact assessment. It just talks about groups that they have consulted and complaints. It is not an impact assessment as you would think an impact assessment should be carried out.
Emma Cooper, from Scottish Rural Action, raised concerns about the lack of local knowledge demonstrated in the assessment.
RBS is suggesting that customers in Campbeltown should go to Brodick, for example, when in the winter there is one ferry a day, you would have five minutes, not even in Brodick, just on Arran, to do your banking.
47.Ms Cooper also noted that some of the alternatives were discussed in very general terms and it was not clear, from the information provided in the assessment, whether those options would be available in a particular area:
Mobile bank vans are referred to in all of the information given out to different people but there is no timetable available and it is not very clear whether or not those communities will actually be getting a mobile bank van service.
We also note that the impact assessments contain no information on the availability and quality of broadband or 4G mobile phone signal in the catchment areas served by a branch, which customers need to effectively use online banking services referred to in the assessments. We further note that these impact assessments make no attempt to consider the impact on vulnerable customers, despite the concerns that were raised by our witnessses.
48.One area in which RBS has gone beyond the requirements laid down in the Standard is the notice it has given of the closures. Professor Russel Griggs, who reviewed the Access to Banking Protocol, notes that RBS announced these closures 6 months ahead of time while the standard only requires 12 weeks’ notice. He also commented positively on RBS’s deployment of digital experts in their branches to help customers move towards alternative ways of banking.
49.RBS’s Impact Assessments only go part of the way to meeting the requirements of the Access to Banking Standard. They do not provide sufficient information on the situation in relation to individual branches, for example whether customers have access to a suitably reliable broadband connection to allow them to use online banking, the practicality of traveling to the next nearest branch or the effective availability of alternative services such as mobile branches and community bankers. Without this information we do not see how these documents can be said to have properly assessed the impact of the closures on customers, businesses and communities. The Lending Standards Board’s current interpretation of impact as being “how far the customers are going to have to travel to the nearest branch” is far too limited, and we recommend that it adopt a more comprehensive view of impact in future reviews.
50.There is currently no requirement under the Access to Banking Standard for banks to consult customers or staff ahead of a decision to close a branch. An RBS spokesman has said: “We are not required to consult with communities in advance. What we do is speak to communities once we’ve announced a closure to make sure our regular customers know all of the ways they can bank.” Emma Cooper, from Scottish Rural Action, expressed disappointment that community groups had not been consulted ahead of the announcement, saying:
“if discussion had been held with communities in advance of the decisions being made perhaps some compromises could have been reached or some alternatives could have been discussed. We have incredibly strong and resilient rural communities in Scotland […] giving them more time and the option to talk to people from RBS about some sensible alternatives and solutions would have been very useful for them”.
Unite Scotland told us they were first made aware of the closure plans on 1 November and had their first “consultation directly with the company on 8 November” but that at this meeting “the bank officers sought to inform us simply about the closures about which they were not prepared to consider any negotiation.
51.We put the proposal that banks should consult ahead of closures to the Lending Standards Board, the self-regulatory body which oversees banks’ compliance with the Access to Banking Standard. David Pickering, Chief Executive of the LSB, told us that the LSB’s role was to enforce the current Standard which had been agreed by the banks. However, he did suggest that the LSB might be open to changing its guidance, depending on what evidence it gathered from its reviews.
52.Despite the consultation that RBS has done since announcing the closures, it appears to us that there would have been real benefit in RBS consulting more widely ahead of the decision to close its branches. The Access to Banking Standard requires banks to make an assessment of the impact closures will have on customers when closures are announced, but it is difficult to see how this can be achieved without banks directly consulting customers before closure decisions are taken. As one witness put it: “How can you know if you don’t ask?”
53.We recommend that the Lending Standards Board consult on amending the Access to Banking Standard to require banks to consult its customers before the final decisions on branch closures are taken and announced. We believe this would be consistent with, and enhance, the current requirements the Standard places on banks to assess the impact of closures on their customers.
54.The Lending Standards Board (LSB) is a self-regulatory body, which provides independent oversight of adherence to voluntary standards by registered firms in the financial sector. The Standards that currently fall within the LSB’s remit are the Standards of Lending Practice for Personal Customers, the Standards of Lending Practice for Business Customers, the Access to Banking Standard and the Vulnerability Principles. The LSB became responsible for oversight of the Access to Banking Standard in July 2017.
55.In their written evidence the LSB told us that it adopts a “risk-based and proportionate approach to overseeing branch closure programmes” and that it meets with every firm that announces a closures programme “to enable us to form a view of the risk presented to the Standards by the firm’s approach”. The LSB then decides whether to review the closure programme once it has been completed or whether to conduct its work alongside the programme. In addition to reviewing individual closure programmes the LSB also conducts thematic review work on higher risk areas: such as identification of vulnerable customers, post-closure support or stakeholder communication. When they appeared before us the LSB emphasised that it was not their role to get involved in decisions about which branches were to close, instead they reviewed the documents that the bank had produced to check whether they complied with the requirements of the Standard.
56.For RBS’s current closures in Scotland the LSB has said it will be conducting its review alongside the closure programme, rather than reviewing it retrospectively. Liz Thompson, Head of Compliance, LSB told us:
The process we have undertaken was very much around obtaining information from them on what they have issued out to their customers, and understanding how that fits with what the standard requires. Part of the oversight process that we have in place is that we report individually back to each firm, and the information within that report that is sent to that firm is between us and that firm. We do not publicly report on what we have found.
57.We discussed in more detail the LSB’s decision not to publish its report on RBS’s compliance with the Standard, or any action plan for improvement that is agreed between RBS and the LSB. We questioned whether this was appropriate given the level of public interest in these closures. David Pickering, the LSB’s Chief Executive, acknowledged that it was “a very fine balance” but said that the confidential approach had worked well in getting banks to make improvements where problems were found with some of the other standards, relating to bank lending, that the LSB has a role in overseeing.
58.We also explored with the LSB what action it could take if they consider that there has been “a material breach” in the Access to Banking Standard. The current options available to the LSB are:
a)The publication of the Registered Firm’s name and details of the Registered Firm’s Breach in the LSB’s Annual Report and/or on the LSB’s website;
b)The issue of directions as to future conduct;
c)The issue of recommendations on the remedy of past conduct;
d)The issue of a reprimand or warning;
e)Public censure of a Registered Firm, by notifying the media of the Board’s findings in respect of a Breach and any sanctions applied, and posting the press release on LSB’s website, and
f)The cancellation or suspension of the Registered Firm’s registration.
We asked the LSB whether they thought these enforcement powers were sufficient, given that the majority of sanctions focussed on the threat of a bank suffering reputational damage - as bank closure programmes already attracted a large amount of public and press criticism. Mr Pickering accepted this point but said that the LSB had had a lot of success in getting banks to make progress by working with them “behind the scenes”. He continued that firms were very responsive to requests by the LSB saying that firms dealt with the LSB “as if we are a regulatory body”. He said that statutory regulation would be needed to allow banks to be fined for non-compliance with the Standard.
59.RBS’s closure programme presents a real challenge for the LSB, as the highest profile closures since it took on responsibility for overseeing the Access to Banking Standard. It needs to be seen as a robust and independent regulator if it is to earn public confidence in the current self-regulatory regime. We recommend that the LSB reconsider its decision not to publish the result of its work on the RBS closure process and any action plan that is agreed; having an open and transparent review process is essential if the public are to have confidence in the current system of self-regulation.
60.We recommend that the Government monitor the effectiveness of LSB as the guardian of the Access to Banking Standard. If the LSB is unable to maintain public confidence in the current regime the Government should consider intervening and consult on introducing a scheme of statutory regulation.
68 Lending Standards Board ()
72 For example—RBS, 13 May 2018
73 For example RBS, Accessed 15 May 2018, but not RBS, , accessed 15 May 2017
75 Professor Russel Griggs ()
76 Daily Record, , 17 December 2017
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82 Lending Standards Board ()
84 Lending Standards Board ()
Published: 27 May 2018