MPs committee urges RBS to reverse branch closure plan
A threatened RBS branch on Barra
UK government ministers have been urged by a committee of MPs to pressure the Royal Bank of Scotland to reverse the closure of branches in Scotland.
The Scottish Affairs Committee has today published a report saying the plan to shut 62 branches will have an adverse impact on communities.
MPs want the government to use its 71% shareholding in the bank to intervene and force it to reconsider. The bank plans to close 52 branches while a further 10 initially scheduled to shut are under review.
Colin Borland, head of devolved nations at the Federation of Small Businesses, said: “The committee rightly recognises that RBS branch closures will have an adverse impact on individuals and communities. The RBS closure programme will also make it more difficult to run a business in many parts of Scotland.
“We are therefore pleased that the committee agrees with us that the UK Government should step in and get some value from its shareholding. Ministers must stop sitting on their hands and ask hard questions of the taxpayer-backed bank.”
The report argues that the running of these branches is a cost RBS can easily afford after the bank made profits of £792 million in the first quarter of 2018, three times higher than profits made in the same period last year.
The committee has also noted its disappointment that the UK Government did not use its influence to prevent branch closures. It has recommended that Access to Banking Standards, a voluntary regulatory standard for banks should be transferred into statute should public confidence in the current regime fail.
Ross McEwan has stated that there will be no further reviews of branches until 2020. The committee has said that should any future review lead to more branch closures in Scotland, RBS must provide detailed information about how the local or technological situation has changed to such a degree as to justify a further round of closures.
It also emerged after the last hearing that RBS’s claim not to have targets for switching customers to online banking was contradicted by a leaked document which showed precisely such a goal for staff.
Labour MP on the committee Ged Killen said: “RBS has claimed in its advertising campaigns to be the ‘Royal Bank for Scotland’, however these closures have seen those warm words turn into hot air.
“If RBS was the ‘Royal Bank for Scotland’ it would halt and reverse these closures, instead RBS will, I have no doubt, close those 10 banks it has given a stay of execution to irrespective of how they are used.
“Throughout this process Ross McEwan has dragged his feet when we have sought to engage with him. As a Labour group we will demand that he is re-summoned before the committee should any further branches be put under threat.
“RBS’s actions have demonstrated that it is not the ‘Royal Bank for Scotland’ but the Royal Bank that left Scotland.”
Mr Killen last week introduced a bill in Parliament (Banking (ATM Charges and Financial Inclusion Bill) that would have transferred the Access to Banking Standards to the Government regulator, as well as introducing a penalty requiring banks to provide funds for communities to set up new banks if they fail to meet minimum standards.
He said: “Under these plans Scottish communities would have been left with funds to set up their own community banks, rather than nothing.”
Labour MP Danielle Rowley, who also sits on the committee, said: “We’ve watched RBS representatives twist and turn in front of the committee but it does not feel like we are much closer to the truth.
“Indeed some of the evidence given just the other week about there being no targets to switch customers online was immediately contradicted by a leaked document which showed there absolutely were.
“While some of the switch to online is happening organically, it is not happening with the indecent haste RBS would like it to. These targets are less of a nudge to customers and more of a shove. It’s time people pushed back.
“If RBS will not behave in a responsible way towards its customers, who as taxpayers are also ultimately its owners, then it must be compelled to do so.”
Hugh Gaffney, another Labour member of the committee, said: “Ross McEwan told the committee that ‘change is difficult’. Well, if it looks difficult to him he should try seeing it from my constituents’ perspective.
“RBS keep telling us that they can close branches because more people are banking online, but what about those who don’t, particularly older people who can’t be convinced that it is secure?
“I accept that many people do bank differently these days but I take issue with the speed that change is being forced through at and the damage it is doing to communities along the way.
“Until RBS accepts that their closure programme will disproportionately affect the worst off and the most vulnerable, they will never understand the frustration felt by customers across Scotland.”