The number of local bank branches has halved over the past 25 years to just 8,000 and is set to halve again by 2026, according to the Federation of Small Businesses (FSB), which also says banks are failing to help businesses find alternative banking services.
Barclays, for example, announced two years ago that 400 branches were to shut, and currently has 130 either closing are about to close. Many of its competitors are following suit.
These worrying developments are revealed within the FSB’s ‘Locked Out’ report published today, which reveals how particularly in rural towns and villages many businesses are left “high and dry” when a bank branch closes.
The FSB’s report says many banks are not doing enough to help businesses find alternative ways to deposit cash and cheques, as the recently-introduced Access to Banking Protocol requires them to.
Implemented in March last year, the protocol is a voluntary but industry-wide agreement in partnership with government and business interest groups to ensure facilities remain “close at hand” when braches close, and “rebuild trust in the sector”.
But the FSB believes that many of the major banks are not sticking to the spirit of the agreement and that the protocol needs strengthening “to ensure banks undertake a proper consultation process, engage with small businesses affected by branch closures and provide appropriate banking service alternatives,” the report says.
According to FSB chairman Mike Cherry (pictured) many bank often refer business customers to their local Post Office as the main alternative for banking services, even though the Post Office announced the closure or privatisation of 42 loss-making branches in January this year.
“Our members have revealed a number of cases where banks have provided inaccurate details of Post Office branches which have wither closed or moved and hot not properly investigated the range of services available,” the report says.
“Post Office in-branch services vary greatly and in many communities this means they do not dater for the needs of small businesses in their area.”
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