The report highlights the vital role that bank branches play in sustaining rural and urban communities. It calls into question the assumptions made by RBS that led to the planned closures and urges greater openness in future decisions. It also says that the UK Government must use any influence it has as majority shareholder to pressure the Royal Bank of Scotland to reconsider plans to close 52 branches in Scotland. As it stands, many branches will shut in June, some have already closed, and an additional 10 scheduled to shut have been given a temporary reprieve.
Impact on communities
When they appeared before the Committee, RBS said that the closures were not a money saving exercise and were a reaction to changes in customer behaviour. The Committee finds that the closure of these branches will have a devastating impact on communities affected, removing vital services from businesses and individuals alike, and that RBS have underestimated how much people rely on traditional in-branch banking services and should halt the closure programme.
The alternatives services being offered to customers are equally insufficient in replacing lost branches. Mobile banking vans and community bankers do not provide the range of services or ease of access of a permanent, static facility. Online services provide a quicker, easier way of banking for many customers, but cannot provide an adequate service in areas where broadband can be patchy or non-existent.
The Committee expresses it disappointment that no UK Government Minister appeared to respond its questions about the closure programme and that the UK Government did not seek to make stronger representations to RBS about the impact these closures will have on communities across Scotland. The Committee recommends that, if RBS does not halt the closure programme, the Government should use any influence that its majority shareholding provides to apply pressure on RBS to reconsider the closure programme.
Ten branches originally scheduled to be closed have been granted a six month reprieve, but information is lacking as to the criteria on which their long-term viability will be judged. Any decision must not be made until six months after an independent reviewer has been appointed and targets announced. Both staff and customers need reassurance that this will be fair and independent, and RBS must properly support these branches to ensure that they are not being setup to fail.
RBS's assurances that there are no plans for further closures and there will be no further reviews until 2020 are welcomed. The Committee will watch future developments closely and expects any future closures to be accompanied by detailed information on how the local or technical situation has changed to justify these closures.
Lending Standards Board
If the Lending Standards Board, the self-regulating industry body for the banking sector, is to secure public confidence it must strengthen measures and increase openness. The Committee recommends the development of measures to require banks to consult customers ahead of final decisions on branch closures. They should also reconsider their decision not to publish the results of their work on the RBS branch closure process and any action plan that is agreed. Self-regulation cannot occur in secret and expect public confidence.
Chair of the Scottish Affairs Committee, Pete Wishart commented:
"The Royal Bank of Scotland do not seem to understand the impact of the closures on communities in Scotland. The loss of a permanent bank, and the services it provides, cannot be replicated by the occasional visit of a mobile bank or community banker. In rural areas, the local branch is as an essential whose withdrawal is compounded by poor access to broadband and journey time to the next available facility. RBS did not consult adequately and even at this last stage should reverse their decision to close these branches.
The reprieve offered to ten branches is inadequate and almost designed to fail, with no solid plan about how these branches performance will be assessed. We also note that the savings secured in closing these branches is dwarfed by the operating profits generated by the bank last year.
The UK Government has an obligation to represent the interests of the citizens and communities in Scotland that will be harmed by this swathe of bank closures. Instead, they have been silent both to those communities, and to this Committee. They own 70% of the shares in this company and should use any influence they have to try and have this decision reversed."