FCA issues updated guidance on branch and ATM closures or conversions

The Financial Conduct Authority (FCA) published updated guidance, FG22/6, on 11 October 2022, setting out its expectations of how firms should conduct branch and ATM closure or conversion processes¹. The guidance replaces FG20/3, which was first published on 14 September 2020 and took effect on 21 September 2020². The updated guidance applies from 11 October 2022 and continues to have effect until varied or revoked¹.

The guidance covers the full closure of a branch or all ATMs operated by a firm at a particular location, a mobile bank facility no longer operating, and partial closures such as a reduction in branch opening hours, days or services where this would have a significant impact on customers⁴. It also covers the conversion of a free-to-use ATM to pay-to-use³. It applies to regulated firms operating branches or ATMs that are subject to Principles 6, 7 and 11 of the FCA's Principles for Businesses².

The FCA said some firms had fallen short of the expectations in its original guidance, and that it had seen firms remove counter services or permanently reduce opening hours rather than fully close branches¹. The guidance states that firms should communicate a closure or conversion to customers and other relevant stakeholders no less than 12 weeks before it is implemented, and should publish a high-level summary of their analysis³. It also states that branches should not be fully or partially closed until reasonable, fit-for-purpose alternatives are in place³.

The FCA also published examples of good practice and areas for improvement identified when supervising firms planning closures or conversions⁴. Good practice included on-site assessments of the local area covering internet access and disability access, considering free-to-use ATMs and cashback in local shops as alternatives, and planning ahead for changes in customer traffic at remaining locations⁴. Areas needing improvement included relying on remote research rather than visiting alternative sites, suggesting alternatives that were themselves due to close or reduce services, and not fully considering the cost to customers of travelling to an alternative branch⁴.

The FCA's Consumer Duty (Principle 12) came into force on 31 July 2023⁴. The FCA said it would continue to supervise bank branch and ATM closures and conversions to ensure fair treatment of customers, and was supporting the Government as it developed legislation to protect access to cash⁴.

Why it matters for households

The guidance sets out what the FCA expects from banks and building societies when they close or convert branches and ATMs, and it applies to closures lasting six months or more³. It covers services used for everyday banking, including cash withdrawals and deposits, cheque deposits, opening or closing an account, proving identity, and dealing with issues related to Power of Attorney or bereavement³.

FCA data from the 2022 Financial Lives Survey, cited in the guidance, found that around a fifth (21%) of adults with a day-to-day account regularly used a particular branch over the previous 12 months³. Adults most likely to regularly use a branch included the digitally excluded (42%), those in poor health (27%) and those in financial difficulty (27%)³. The same survey found 6% of UK adults used cash to pay for everything or most things over the previous 12 months, rising to 9% for adults with one or more characteristics of vulnerability³.

The guidance states that firms should consider the needs of customers using a closing site, including small and medium-sized enterprises, micro-businesses and customers in vulnerable circumstances, and the alternatives that could reasonably be put in place⁴. It also states that firms should write directly to customers who use the closing branch and will be impacted by its closure³.

What happens next

The FCA said it would review the guidance and revise it if appropriate in respect of its new access to cash powers or further developments in retail banking³. It had announced on 19 May 2022 that the FCA would receive new powers to ensure the continued availability of withdrawal and deposit facilities in local communities across the UK³. The FCA's access to cash rules came into force on 18 September 2024⁵. The FCA has said it will continue to supervise bank branch closures and ATM conversions⁴.