By Mark Kleinman, City Editor
Britain's banks will pledge this week to continue investing in their branch networks "for decades to come" despite signing an agreement enabling them to close outlets even when they are the final one in a local community.
Under the 'Access To Banking Protocol', a copy of which has been obtained by Sky News ahead of its release on Thursday, lenders will have to provide 12 weeks' notice of any branch closure and publish an assessment of the likely impact on its customer base.
"Banks will publish the results of their engagement and impact assessment, and the considerations taken into account in assessing the impact of the branch closure, subject to the removal of commercially sensitive information," the document is expected to say.
"The results will be made public before the closure of the branch."
However, the agreement drawn up by officials working for Vince Cable, the Business Secretary, and the British Bankers' Association (BBA), is unlikely to stall the accelerating wave of branch closures being undertaken by major high street banks across the country.
"While ensuring that customers are treated fairly, decisions on branch closures are ultimately commercial decisions for banks to take," it will say.
That acknowledgement is likely to dismay community campaigners who have expressed alarm at the disappearance of hundreds of branches, with Lloyds Banking Group alone saying it will shut a net figure of 150 – equivalent to less than 10% of its network – by the end of 2017.
This week's deal will include a commitment from banks that they will consult on the provision of alternative banking services such as a new ATM, credit unions and Post Office branches, which Mr Cable has said will become an increasingly important element of the UK's banking infrastructure.
"Banks will…engage at an early stage with the Post Office to coordinate communications, operational planning and use of brand," the agreement will state.
The protocol is also expected to say that once a branch closure decision has been taken, "banks will be obliged engage with other key local stakeholders (these may include the local authority, local business associations and local advice agencies)".
While banks will have to consider the impact of the closure on vulnerable branch users, there will be no obligation for them to reconsider their decision if the impact assessment indicates that disproportionately high numbers of elderly or disabled customers would be disadvantaged.
Where alternative banking services are likely to be required, suitable options will be provided before a branch is closed, the protocol will say.
"The nature of this alternative provision will be informed by the bank's impact assessment and the community engagement described above.
"Consideration will be given in particular to ensuring the continuity of small business relationship management (e.g. telephony, internet), and enabling branch users to check balances, make cash withdrawals, and make cash and cheque deposits."
As Sky News revealed last week, the new framework will come into effect on May 1, with "any existing plans for branch closures…reviewed in the spirit of this protocol".
An independent review of the agreement with the banks will take place after 12 months to see if it is providing the necessary assistance to affected communities.
The BBA will engage with the Department for Business, Innovation and Skills, the Treasury and the Financial Conduct Authority when appointing the independent reviewer, and consult with consumer and small business groups.
"Banks will…take into account the local availability of broadband and access to alternative ways to bank for vulnerable customers," the protocol will say.
"The existence of an alternative bank's branch alone will not be considered an appropriate suitable alternative."
However, the document to be published this week is not expected to highlight any potential repercussions for banks not deemed to be complying with the protocol.
Sky News revealed in January that Mr Cable had been keen for banks to renew a binding commitment not to close branches when they were the last one remaining in a local community.
However, bank chief executives made clear their belief that rapid technological changes - with customers now performing billions of transactions remotely each year - had rendered such a pledge obsolete.
The BBA is expected to herald the protocol as a "ground-breaking agreement" that will ensure bank customers are supported in their use of internet and mobile banking services, as well as continuing to invest in their "integral" branch networks "for decades to come".
A spokeswoman for Mr Cable's department and the BBA both declined to comment.
