18 September 2018
Speech in the Scottish Parliament
Today’s debate has reminded us, once again, of the gulf between what communities expect from their high street banks and what those banks think that they are obliged to deliver.
As has been said, banking is a public service that is provided by private businesses. However, of course, that does not tell the whole story.
Rarely has any sector of private business owed its very survival to such a large scale of public intervention.
Although closing local branches might represent a different scale of impact from the casino banking that brought the global economy so close to catastrophe a decade ago, the sweeping closures that we have seen in Scotland and across the UK in recent years suggest that bank executives still pay scant regard to the communities that provide their profits and whose need for financial services they are supposed to meet.
In my region, we have seen round after round of closures, most recently, but not exclusively, on the part of the Royal Bank of Scotland.
The list of RBS closures reads like a travel guide to the north-east: Banff, Turriff, Huntly, Ellon and Montrose this year; Westhill, Banchory and Stonehaven last year; and, as Mike Rumbles reminded us, Alford and other places before that.
In Aberdeen city, suburban communities such as Dyce and Bridge of Don have also lost their local branch and, of course, many local jobs have gone as a result.
Earlier this year, I joined members of the bank workers union, Unite, in a protest against the closure of the Bridge of Don branch, and the wider closure programme.
Sadly, as we have heard, the best efforts of staff, trade unions, customers and parliamentary committees have so far failed to halt the industry’s drive to withdraw from most of Scotland’s high streets.
It is true, as the banking industry is keen to tell us, that not everyone values their local branch.
Many customers choose to do their financial transactions online or through their mobile phone.
Having those choices online is certainly beneficial from the point of view of the banks. However, the key word is “choices”.
Closing branches denies choice to customers who prefer to bank in person in their local community.
As we have heard, the customers who are least interested in online or mobile banking and who choose to use their local bank are often older people and more vulnerable people.
In Scotland, 20 per cent of people are not online at home, and it is those people who have the most to lose from the closure programme.
As Age Scotland has pointed out, it is often people who are socially isolated in other ways for whom doing business in person at their local bank, post office or shop is important not only in itself but to keep them in touch with their local community.
It gets them out of the house so that they can have the social engagement that is vital for their health and wellbeing.
We have heard a number of speeches about the importance of local bank facilities to local businesses.
The ability to deposit takings and access cash is vital to the day-to-day running of many small firms.
Some small businesses are very comfortable and happy to do much of their work online, but many are not and many do not have that choice given the nature of the business.
What matters is that businesses should have a choice about where to do their banking and be able to do what suits them best.
Instead, the banks have taken a blanket approach.
There is evidence in the committee’s report—there has been some reference to this in the debate—that banks want to speed up the shift from face-to-face banking to online transactions.
It is as if they want to make online transactions the standard or, indeed, the only way of accessing cash and services, rather than it being one of several options that are open to their customers.
Too many rural areas in particular have had those choices taken away.
This debate is about access for individual customers, particularly older and more vulnerable people.
It is about access for businesses, particularly local small firms that rely on cash transactions with local customers. It is also about the health and wellbeing of local communities.
There still seems to be little willingness on the part of the banking industry to accept collective responsibility for ensuring continued access to face-to-face banking for those who choose that service in local communities.
That needs to change. Banks compete with each other, as well as with alternative providers of financial services.
Therefore, it might seem counterintuitive for them to co-operate to provide all their customers with choice about how they access banking services, but that is what needs to happen.
Among several good recommendations that are made in the report, I highlight the one that calls on the Scottish Government to “call a summit” to get banks to work together to provide access to shared services through, for example, a shared banking hub in a community.
I hope that ministers will agree to do that.
I welcome the member’s emphasis on the banks working together.
Does he agree that the Link system, in which the banks work together and which allows a person to get their cash out of almost any machine, shows that the banks can work together if it suits them?
John Mason is absolutely right.
The Link system is a critical way in which banks combine to provide a service.
There is, of course, a commercial aspect to that system, and there has been serious concern about that in the recent past.
However, the point about putting pressure on the Link system to maintain access to cash machines is one that can be replicated for banks and branches.
Why not have banks working together? If a community—whether it is Castlebay in Barra or Alford in Aberdeenshire—can have access to the services of several different banks through a hub that is operated by one of them, that is clearly a better solution for everyone than getting to a position in which bank after bank is closing.
As Colin Smyth said, in a very short time a village or town can go from having three bank branches to having none.
Action can be taken in that area.
We have heard about strengthening the access standards, which we support, and about improving the delivery of banking services by post offices, credit unions and mobile banking vans.
That would be welcome in so far as it can be done. However, Scottish ministers can engage banks in the delivery of shared services without waiting for action elsewhere, and I hope that such engagement will now follow.
A year ago, Paul Wheelhouse reported to Parliament that there was “recognition” among members of the Government’s Financial Services Advisory Board
“that consideration of the impact of closures was now necessary”.—[Written Answers, 27 September 2017; S5W-11029.]
Banks need to act on that recognition. If they do not, the case for changing the law will only get stronger. If the only way to protect choice for customers is to put new legal obligations on banks in relation to public access in communities, that is what should happen.
As my colleagues said, a good start would be to require banks to consult communities and businesses before, rather than after, deciding whether to close a branch.
That change should be required by law, which would build on the committee’s report.