13 September 2011

BANKING COMMISSION FAILS COMMUNITIES

The Vickers Report, strong on banking structure revision but weak on improving competitiveness, has not lived up to Treasury ministers’ misplaced assumption that it would seriously address the issues of bank branch closures and provision of alternative local access to banking services for small businesses and vulnerable individuals.

Derek French, Director of the Campaign for Community Banking Services (CCBS) said:
“The Commission’s remit of structural change and competitiveness was not the right vehicle to bottom this problem and by its skimpy and unchallenging analysis this is confirmed but will ministers now step in and act or stand by while the big banks withdraw from local communities at an accelerating rate? ”

Having emphasized the importance of branch networks to consumers and to new banking entrants elsewhere in its Final Report, the Independent Commission on Banking (ICB) goes on, in paragraph 8.44, to “not see a clear reason for making recommendations in this area.” In spite of being required by the Treasury Select Committee in April specifically to consider the solutions of improved inter-bank agency agreements (IBAAs) and neutral shared branches, the Commission has based its ‘no action’ stance on a misrepresentation of shared branching principles with regard to neutrality, overlooks the well documented serial shortcomings of IBAAs and ignores the infrastructure deficiencies which prevent the post office network providing a counter service to SME customers of the major banks. The Commission was in receipt of evidence on all these points from CCBS.

Meanwhile the big banks continue to close branches, particularly targeting communities where branch access is completely removed or competition eliminated. The costs of structural reform - £4bn-£7bn p.a. – will likely lead to even more closures.

ENDS

Contact: Derek French, Director, Tel - 01582 764760

Notes for Editors:

1. CCBS is a coalition of 20 national organisations sharing concerns over bank branch closures, community sustainability, financial exclusion and carbon emissions. www.communitybanking.org.uk
2. The Final Report of the Independent Commission on Banking was published 12 September 2011.
3. Information on shared branching is available in ‘Bank Closure Problems – One Solution Fits All’ November 2007 www.communitybanking.org.uk/reports.htm
4. Information on inter-bank agency agreements is available in ‘Government Fails Small Businesses Again – The IBAA Saga’ February 2008 available at www.communitybanking.org.uk/reports.htm
5. Branch closure record is contained in ‘Branch Network Reduction Report 2011’ available at www.communitybanking.org.uk/reports.htm