Residents of rural communities could be forced to travel miles to their nearest bank after the biggest lenders refused to commit to never shut the ‘last bank in town’. After months of negotiation, the Government failed to secure the crucial agreement to protect customers, as bank bosses justify branch closures by stressing the soaring popularity of online banking. The High street banks have agreed to new industry-wide rules setting out a series of steps they must take before closing branches. Blame it on the internet: As they refuse to commit to never closing 'the last bank in town', bosses justify branch closures by stressing the soaring popularity of online banking . But critics say they do not go far enough and will allow lenders to shut hundreds of branches across the country – even when there is no other bank in the community. Under the new regime banks will have to consult with local communities before any branch closure and ensure there are alternatives for customers such as free cash machines, ‘mobile banking vans’, and a local Post Office where they can sort out their finances. Existing rules stipulate that they have to go through this process only if they are closing the last branch in a town or village. Banks also have to give 12 weeks’ notice before they shut a branch. Business secretary Vince Cable described the new ‘protocol’ as a ‘major step forward’ in ensuring those who do not bank online are ‘not left behind’. But last night Labour described the rules as another ‘nail in the coffin for the High street’, as all the major lenders have now ditched a previous commitment always to keep open the ‘last bank in town’. Vince Cable described the new ‘protocol’ as a ‘major step forward’ in ensuring those who do not bank online are ‘not left behind’ Lloyds became the last to do so in October, as it announced a three year plan to shut 200 branches and open 50. Efforts by Mr Cable to force banks to reinstate this commitment have been rejected and experts have warned that 978 branches around the country are now at risk. In total more than 500 branches are expected to be shut during the course of the year, with 210 closures announced so far. Of these 124 are the last branch in the community. For example, some 8,000 residents of Keynworth in Nottinghamshire have been left without a bank after the closure of their local NatWest branch earlier this year. and St Agnes in Cornwall has also lost its only branch after Barclays put down the shutters for the final time. There are now just over 9000 bank branches across the country, half the number of 25 years ago. Derek French from the Campaign for Community Banking said efforts by the coalition to beef up protection for consumers have failed. He said: . ‘The government is trying to gloss over the fact that in reality it has achieved nothing and will not prevent hundreds of branches from disappearing from Britain’s high streets. This is hugely damaging for local communities. The hardest hit will be small businesses, the elderly and the vulnerable – who rely heavily on their local bank’. Chris Leslie, shadow chief secretary to the Treasury said: ‘This is a massive embarrassment for Vince Cable. Local communities sometimes rely on the basic services of a branch and this feels very much like another bail in the coffin for the High Street.’ The bosses of all the major banks have justified the closure of branches by stressing the soaring popularity of digital banking – both online and on smart phones. They have also argued it is not viable to keep certain branches open because so few customers use them. Royal Bank of Scotland boss Ross McEwan last year described its busiest branch as the 7.01am train from Reading to London Paddington, with over 167,000 using its mobile banking app between 7am and 8am on their commute to work every day. The British Bankers’ Association says internet and mobile banking is now used for transactions worth £6.4 billion a week – up from £5.8 billion last year. But according to charity Age UK, more than a third of older people have mobility problems making travelling long distances to their nearest branch difficult. Almost 15pc have limited dexterity which means it is hard to use the internet while 4.8 million people aged 65 and over have never been online. Caroline Abrahams, charity director of Age UK said: ‘Accessing cash and paying bills are essential services which must be easily available to everyone. But the combination of bank and building society closures, particularly in rural areas, and the industry’s growing reliance on online services mean access has become increasingly difficult for many older people.’ Vince Cable has said that the Post Office can play a vital role in providing an alternative for bank customers. Most banks already offer basic services via the Post Office’s 11,500 branches.
Biggest lenders refused to commit to never shut ‘last bank in town’
Bank bosses are blaming branch closures on online banking . Vince Cable described the new ‘protocol’ as a ‘major step forward’