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Banks will now be required to inform the regulator and give their customers a 12 week notice period if they are making closures, as a result of new guidance on the matter. The Financial Conduct Authority (FCA), Britain’s financial watchdog, has said it expects banks and building societies to keep it informed of closures or conversions. The decision has been made to ensure ample notice for all those involved before a final decision is made.
A notice period is likely to be welcomed by many customers, who will be able to take action, for example, by finding an alternative bank or investigating other banking options.
Banks will also be required to provide analysis of how their customers use the facilities, and the impact of closures on these groups.
The new guidance from the FCA will come into force on September 21, and is likely to positively affect banking customers.
Indeed, the guidance is also likely to help vulnerable customers who may rely upon a local bank to help them manage their money.
The FCA guidance states banks must assess alternative options for this group, stating: “This should include consideration of the relevant characteristics of customers and of the area, such as the quality of internet or mobile signal.”
For those who have been forced to shield, either because of medical conditions or age, getting out and about to access cash has presented a challenge.
According to the watchdog’s Financial Lives survey, one in 10 adults said they did not know how they would cope in a cashless society.
And 11 percent of those asked said they relied upon cash to either a “great” or “very great” extent.
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Managing the needs of customers, therefore, has become a significant priority, as the closure of branches could cut some off from easily accessing the funds they need.
However, there is an important warning for Britons to bear in mind, despite the seemingly positive changes.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, commented on the decision.
She said: “This isn’t enough to safeguard the future of the increasingly endangered branch network.
“At best it’ll give you time to switch to a different local branch, and at worst it will close the last bank in town and offer advice on online banking instead.
“For banks, this offers the opportunity to close expensive branches with dwindling customer numbers. But for those customers who rely on them, it can make life incredibly difficult.
“Vulnerable people are far more likely to rely on cash and to struggle to go further afield if a branch is closed.
“In many cases, online banking isn’t suitable for their needs, so they risk being cut off if their branch or ATM closes for good.”
However, Ms Coles has highlighted that the Budget announced in March could provide valuable reassurance to Britons.
In the Chancellor’s outline, there was a pledge to legislate to ensure people have access to cash.
Ms Coles has said this could end up protecting those who need it most.
But it still remains to be seen how the government will progress with the issue going forward.
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