Vulnerable customers are being forced to pay to access their money as banks close branches and axe free cash machines, say MPs.
Communities across the country – particularly in remote areas – have been robbed of essential banking services as business moves online.
Many customers now have to travel for in-branch assistance or withdraw money at a hefty cost from fee-charging machines.
MPs on the Treasury Select Committee have launched a probe into the diminishing accessibility of financial services, with one branding the situation ‘shameless’.
With bank branches closing across the country, especially in rural areas, many customers have to withdraw money at a hefty cost from fee-charging machines
Simon Clarke, a Tory member of the committee, said: ‘These essential banking services are disappearing for those who really need them.
‘Where villages have closed their last branches or cash machines, elderly customers may be completely cut off as they might not be able to make the journey to neighbouring villages.
‘It’s not just a case of jumping on a bus. It might take three buses with half-hour waits in between. Being forced to use fee-charging cash machines is an outright tax on elderly people with a limited income. The charges are shameless.’
Free cash machines are disappearing at a record rate. In June, consumers’ association Which? revealed they are closing at a rate of 300 a month, with rural communities worst affected.
Withdrawals from fee-charging machines typically cost £1.70. For those who can only afford to take small amounts of cash out at a time, costs rack up fast. A £1.70 charge is an 8.5 per cent levy on a £20 withdrawal and 3.4 per cent on £50.
Meanwhile brutal cuts have resulted in branch closures with 60 shut every month. Banks say they are not needed as visitor numbers are too low to sustain them.
The effect of closing branches and removing cash machines is causing real distress among the elderly who are more likely to use cash.
Gareth Shaw, of Which? Money, said: ‘Bank branch and cashpoint closures continue at an alarming rate. We know such closures hit rural communities especially hard, with poorer and elderly people most likely to suffer.
‘Millions of people are reliant on access to cash and traditional banking services and must not be financially excluded through these closures, which can devastate communities.
‘The services provided must cater to the needs of all consumers, allowing them to conduct their financial affairs as required, and not risk shutting such a large amount of them out.’
The Treasury committee will also examine how banks and insurers treat vulnerable customers, to see if they pay more for products, and to what extent financial services providers ensure customers understand what they buy.
It will also evaluate how regulators assess if products are fairly priced.
Nicky Morgan, chairman of the committee, said: ‘Vulnerability, as defined by the Financial Conduct Authority, is where someone who, due to their personal circumstances, is especially susceptible to detriment – it’s becoming increasingly difficult for vulnerable customers to access certain financial services.’
Tom Selby, analyst at AJ Bell, said: ‘Ensuring vulnerable customers are protected is one of the most important challenges facing the financial services today.’