...Campaign for Community Banking...

Biennial review time again for the Banking Codes and CCBS is seizing the opportunity to demand correction of a major injustice. Last time the review produced a result, as far as branch closures are concerned, not only damaging to consumer and small business interests but in conflict with the apparent intention of the independent reviewer.

For a very small number of branches (less than 50 in England & Wales), where there is no other bank branch within a 5 mile radius, an extra 4 weeks notice of closure was conceded. However, the non negotiated introduction of the 5 mile radius definition of what is a “last bank” has undermined pledges given by individual banks to keep 400 such branches open for the foreseeable future.

All branches
CCBS’s submission to the 2004 review comprises:

The trigger for the minimum notice period should be extended to include, in addition to full closure, a material reduction in the availability of branch services such as opening for fewer days/hours or the substitution of automated for counter services.
The Code should contain an obligation to invite consultation with customers and other users during the notice period accompanied by a stated preparedness to withdraw, delay or amend closure plans in response to the consultation.
There should be an obligation to conduct an assessment of the impact of the closure (or material reduction in service availability) on customers, users and the community including the relevance of substitute arrangements offered. The results of the assessment should be publicly accessible.

Last Bank situations
CCBS demands to have the 5 mile radius hurdle substantially reduced, and proposes its replacement with ½ mile.
The banks themselves, in a mandatory report on branch access to the Office of Fair Trading, defined a financial centre’s boundaries as less than ½ mile, classifying a branch more than 500 metres distant as in a different centre.

The CCBS argument for retention of a bank branch is based not only on the distance/time to travel to an alternative banking location but also on the key role of a bank branch in the critical mass of retail and other services that ensure the viability and sustainability of the centre concerned.

Inter Bank Agency Agreements (IBAAs)
Under long standing arrangements a small business customer of one bank can apply to use the counter of a more convenient competing bank on an agency basis. Agreement and charges are a matter for the banks involved.

These inter bank agency agreements are not widely known about by customers who could benefit and the banks claim there is little demand: an average of 0.4 such arrangements per branch exist across the networks. However, where potential users were made aware of the facility, as part of the banks’ 2002 ‘shared banking’ pilot in 10 very small single bank communities with a low pool of branch using customers of other banks, 26 business customers per branch on average used it and expressed satisfaction. Inclusion of IBAAs in a Voluntary Code of Practice was recommended by GBRW Ltd, advisers to the OFT, in 2003 and CCBS seeks to use this review to implement it.

If the Codes are to be accepted as a legislation substitute, the banks need to do better.

The review of the Banking Codes is being conducted by
Professor Elaine Kempson
c/o BBA Pinners Hall
105-108 Old Broad Street
London EC2N 1EX