The guidance, which already expects banks to carry out thorough checks on the impact permanent closures will have on customers, has now been extended to cover partial closures.

While banks may continue to transform their businesses in line with changing technology and customer behaviour, they should consider the impact changes to services will have on customers’ everyday banking needs.

Since the FCA began supervising firms’ closure plans in 2020, it has seen evidence of good practice, such as firms actively considering what alternative options are available and taking into account the needs of customers of branches set for closure.

This has included expected queue times at the remaining branch and access for those with disabilities. This insight has helped reduce the impact of closing a branch and has resulted in action such as banks increasing capacity at other local branches before making a closure.

Where firms have fallen short of expectations, the FCA has asked for closures to be paused or other options to be put in place. The updated guidance further clarifies what is expected of firms and strengthens protections for consumers that rely on branch services.

Sheldon Mills, executive director consumer and competition, said: “We know that the way people use banks is changing. More and more people are managing their finances online – and we want banks to support more people to get the benefits of innovative digital services. However, we know that for many, having a branch or ATM nearby their home is an essential part of looking after their household finances.

“The industry must make sure they are supporting people and businesses who rely on cash and banking services. That is why we’ve published updated guidance for banks that are considering branch closures and reminded them that we want alternatives, such as banking hubs, delivered quickly and as a priority.”

Where the need for an alternative is identified, firms should now make sure it is in place and accessible before a branch closes or an ATM is converted. This change to the guidance will help prevent customers from being impacted by a gap in service.

Alongside this new guidance, the government is also proposing new powers in the Financial Services and Markets Bill to help protect access to cash. The FCA welcomes these proposed powers, which will help to ensure reasonable access to cash, however, they will not extend to the provision of wider banking services and are not specifically directed towards the maintenance of branch networks.