John Healey: Time for new checks and balances over bank branch closures

Bnaks like HSBC have been accused of betraying local communities.Bnaks like HSBC have been accused of betraying local communities.
Bnaks like HSBC have been accused of betraying local communities.
WE did not have a happy New Year in Wath-upon-Dearne. In January, within a week, HSBC and Yorkshire Bank announced they were shutting, leaving no bank in this proud Dearne Valley village.

Wath is known as South Yorkshire’s ‘Queen of Villages’, though with 12,000 residents and serving the wider Dearne, it is more town than village. People rightly reacted with concern and anger, with more than 1,200 people signing my petition against the closures.

Wath is one of 39 branches Yorkshire Bank is closing, while HSBC is axing 62.

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Since 2010, the ‘big six’ banks – Barclays, HBOS, HSBC, Lloyds, NatWest and Santander – have closed nearly 2,600 branches across the country. This year is on course to be a record, with 423 bank or building society branches already put on notice of closure.

Of course there is a big shift towards digital transactions, but most branch closures are in smaller towns which are already struggling to hang on to shoppers and other local facilities. Closing a bank makes a community like this less easy to live and work in.

Worryingly, research suggests the closures are targeted on poorer areas where the number of customers using the bank may be in line with other branches but the value of transactions is low, while elsewhere branches are being revamped and opened up to attract young, better-off workers.

The Dearne Valley has been on the up – large numbers of businesses are relocating and family homes are being built here with the continuing regeneration. The number of businesses has more than doubled in the last five years: 465 in 2016, up from 225 in 2011. Also in the last five years, 635 new homes have been built, with another 182 are under construction.

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I fought hard against the bank closures because I don’t want anything to threaten this progress.

I met senior executives of both HSBC and Yorkshire Bank. I told them about local businesses and community groups that need to be able to deposit takings or draw large cash floats. Above all, I argued the case for all those who can’t do mobile and online banking or who want to be able to deal with their bank face-to-face.

Both banks were completely closed to any argument. When I asked, both said they’d never changed their mind and stopped a closure after this period of “community engagement”.

I even presented a special proposal to Yorkshire Bank, because it’s our local bank – its brand is Yorkshire, its roots are in Yorkshire. I asked them to consider a ‘stay of execution’ while I led a community campaign to encourage people to switch accounts on a ‘use it or lose it’ basis. This has never been done before but I’m convinced hundreds of people in the Dearne would consider switching to back a bank that backed their area, especially as changing banks is now much easier to do with guarantees built into the system. 

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While they tell me they considered the idea at a high-level internal meeting, they weren’t willing to give it a go and will still close in May. HSBC wouldn’t budge either and will shut in June.

For the last couple of years, banks announcing a closure have had to carry out an ‘impact assessment’. One of the things this looks at is the number of vulnerable customers who depend on the branch. But it did not matter or make a difference to HSBC that 14 per cent of their Wath customers are over 70, that more than half (57 per cent) never set foot in another branch or that one in six do not use online or telephone banking.

At Yorkshire Bank in Wath, fewer than one in three customers are registered for internet banking, while people aged over 60 account for nearly a quarter of their customers.

We’re told Post Offices are the answer but they’re just not a good enough alternative. They are increasingly combined with convenience stores or chemists, and lack the capacity and privacy for banking transactions. Our local Wath Post Office manager is keen to help but the combined customer count of the two bank branches is around 17,000.

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In 20 years as an MP, I can’t recall being as angry about a decision affecting our area as I am about these banks.

People remember how the country stood behind the banks through the global financial crash that their reckless business practices and profiteering caused. It was governments that acted and taxpayers that paid the bill. By 2010 the level of support for the UK banking sector was £512bn.

After causing the financial crisis,
banks need to build back trust with
their customers, not become more
remote and turn their back on communities like the Dearne. It’s time to toughen up the tests we expect banks to meet when they plan to shut local branches. Banks should have to show they’ve made some provision for their elderly or vulnerable customers, that there is an adequate alternative for local companies and that options other than full closure are not viable.

I want to see the Government front a new national debate about what we need from our banks in Britain, and set out a long-term plan to ensure they are better centred on the customers and communities they serve.

John Healey is MP for Wentworth & Dearne and Shadow Secretary of State for Housing.