The banks are beginning to use an arbitrarily imposed measure “no other bank branch within a 5 mile radius” as the sole criterion for affording concessions, however minimal, to vulnerable consumer and small business demands for continued local banking access. For example

• No other bank branch within a 5 mile radius of the sole (remaining) bank in a community was, regrettably, the only criterion for the discredited ‘shared banking’ pilot scheme run by the banks in 2002.
  
• A longer (12 weeks) notice period for branch closure has been introduced into the Banking Code, March 2003, for “last bank” situations but only if the branch meets the no other bank within a 5 mile radius criterion.
  
• Most remaining small town and village “last bank” situations currently enjoy limited protection against closure, following pledges by most banks made in 2000, “for the foreseeable future,” but there is growing evidence of banks reducing days/hours of opening in these locations and if the no other bank within a 5 mile radius criterion was imposed many would lose the protection altogether. (An August 2003 “suburban” closure by HSBC is justified by “other branches within a 5 mile radius.”)

The “no other bank within a 5 mile radius” had been introduced by the banks without consultation with consumer and small business organizations, against (in the case of the Banking Code revision) a recommendation more generous to consumers by the independent reviewer of the Code and when challenged to disclose the numbers of branches affected the British Bankers’ Association (the industry’s trade body) claimed “not to collect industry wide data” on the issue.

Additionally, seriously incomplete data on the numbers of sole and dual bank communities was used in March 2003 on behalf of the banks in a national branch access study for the Office of Fair Trading to justify a substantial understatement of potential demand from small businesses for use of more convenient competing banks’ branches for pay-ins and withdrawals. The banks’ report, prepared by IBM Consulting, implied that only 240 sole bank, and a further 240 dual bank situations existed in Great Britain.

The scale of sole, and dual, bank communities has important implications for the exercise of competitive choice at local market level by personal and business customers who are “branch dependent”, including the elderly, immobile and small retail businesses.

In the light of these developments, and the opportunity for further misuse by the industry, it has become necessary for the consumer side to obtain robust data on the number and location of sole, and dual, bank communities according to mileage band proximity to the next nearest bank branch. It is also timely preparation for when the banks resume branch closure programmes which they inevitably will as the economic drivers responsible for past closures i.e. increasing use of non-branch channels and growing competition for lucrative savings, investment and lending business from non traditional sources have not halted.

Note: Road mileage distances exceed the radius measurement thus adding more to the inconvenience suffered by the user in the event of closure of the local branch than is readily apparent.