The Financial Conduct Authority (FCA), the watchdog that oversees financial firms providing services to consumers, has asked banks to reassess their plans for branch closures during the coronavirus lockdown.

As Covid-19 restrictions continue to take their toll, banks and building societies are preparing to close at least 300 branches by the end of 2021.

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“We are concerned that these activities could have significant consequences for customers,” the regulator said.

It may be harder than usual to reach all customers under the current restrictions and engage with them on closure proposals effectively (for example, small businesses that are temporarily closed), the FCA added.

Some customers may need to access in-branch services to help them prepare for closures but may be unable to do so.

Customers may also need additional help to access online banking and making payments.

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These are all concerns expressed by the financial overseer in a new release to the financial institutions.

The FCA urges compliance with its Principles for Businesses

“We want firms to review their plans against our existing guidance and ensure that they continue to comply with our Principles,” the FCA said.

The regulator has asked banks to consider the impact of branch closures on customers, in line with the FCA’s guidance.

“Where they are unable to meet the expectations of our guidance during lockdown measures, they should consider pausing or delaying new branch closures where possible, particularly where this could have significant impact on vulnerable customers,” said the trade body.

This would be similar to the approach firms took during lockdown measures in 2020.

“Where firms consider it is appropriate to continue with plans during this period, we expect them to have considered our guidance and be able to demonstrate how they’ve taken the concerns and expectations set out in this statement into account.”

What banks should do if they must close branches

If firms are considering new closures or advancing those previously announced during this period, the regulator expects them to:

  • communicate with customers in a way that is clear, fair and not misleading to inform them of the closure proposals. Particular consideration should be given to the best way to make sure vulnerable and hard-to-reach customers are aware of the proposals and are able to contact the firm.

 

  • give customers clear information about how the firm can help them access alternatives during this period of national restrictions, for example support to use online banking.

 

  • where appropriate, engage with customers to understand their needs and properly consider how they will be affected by the proposals.