Labor plans to force a vote on guaranteeing personal banking across the country, after closing swathes of branches that left communities without face-to-face services.
The party’s amendment to the Financial Services and Markets Act would give city regulators the power to ensure communities have regular access to “essential” personal services, including opening new accounts, applying for loans, making and receiving payments, and establishing standing orders.
This could mean protecting bank branches that might be at risk of closing or creating shared service hubs in underserved communities.
Since 2015, nearly half of UK bank branches have closed, as lenders cut costs and switch customers to online banking.
The amendment, introduced by Shadow City Minister Tulip Siddique, goes beyond the government’s proposals to ensure access to cash and support vulnerable people, including poorer or elderly individuals, who struggle to use digital banking services.
The business is also pushing for free access to cash, amid concerns the legislation could lead to consumers paying fees for withdrawals from automated teller machines or retailers.
Siddig said: “We welcome that the government – after years of delay – has finally announced that it will introduce access to monetary legislation, but this bill does nothing to protect direct banking or free access to monetary services that the most vulnerable in our society depend on.
“It is imperative that payment systems and banking services continue to innovate, but the failure of the Conservatives to protect these services threatens to cut off millions of people from essential goods and services. I hope the government will do the right thing and support Labor’s amendments.”
A Treasury spokesperson confirmed the government was offering access to monetary legislation, but would not comment directly on the personal banking proposal put forward by Labour. The Financial Conduct Authority (FCA) declined to comment.
The Friend Amendment is the latest addition to the wide-ranging bill, which broadly aims to overhaul city regulations originally inherited from the European Union. If passed, it would also give regulators the secondary aim of boosting the competitiveness of UK companies.
Labor revealed earlier this month that it would also use the bill to push for its first “national fraud strategy” in a decade, after consumers and businesses lost a record £1.3bn through financial scams and scams last year.
The government is also considering whether to introduce a separate amendment that would controversially give exchequer ministers sweeping powers to override decisions by UK watchdogs including the Bank of England and the Financial Conduct Authority. Some senior officials warned that this could threaten the independence and reputation of the country’s financial regulators.