Jeff Salway: Loyal customers failed once more by banking industry

THE strength of the backlash against the planned abolition of cheques clearly took the banking industry by surprise. Could it be that the industry was out of touch with its own customers? Who would have thought it?

The decision to withdraw cheques in 2018 was based on the belief that they are losing their relevance as the number of people using them declines. A different conclusion would have been reached if the UK Payments Council, the organisation which represents the banking and cards industry, had started from the position of asking whether cheques provide an important service to a large proportion of bank customers. Thankfully the council has listened to the feedback and abandoned its plans.

Bank branches fall into a similar category to cheques - not the priority they once were, but still an important service. But some banks are more out of touch than others. While competition heats up for more than 600 branches that Lloyds is being forced to sell and some institutions look to extend their high street presence, Royal Bank of Scotland is quietly branches all over Scotland.

It has closed Bettyhill, Dounreay and Glasgow Fruit Market. Next month the Aberdeen Central branch in Golden Square will close, leaving just four RBS branches in the area. It is also closing two Perth branches this month, including a site on the High Street, with just one left in the city centre, while the Beresford Terrace branch in Ayr shuts down next month.

The Lochee and Ninewells branches in Dundee are also on the list of doomed branches. Others closing this summer include Edinburgh Leith Walk, Arrochar, Brearsden The Cross, Edinburgh Salisbury and Edinburgh Mortgage Ship. Some may be justified, others not.

The bank said closure decisions were never taken lightly. A spokesperson told me: "We continually review our branch network to ensure that we are offer the best value and service we can to our customers, this means providing local banking services where there is demand and where they are used regularly by customers."

Yet RBS has plans to close more than 50 branches around the UK this year. It has also reportedly broken a pledge to retain branches that are the last in town by closing its NatWest outlet in Farsley in Yorkshire. It can still claim to be the last bank in town in 75 areas in Scotland, however.

It attitude contrasts with that of its rivals. For example, in its strategic review last month, Lloyds pledged to keep "total branch numbers at the same levels", excluding those being sold on European Union orders.

To its credit, RBS has extended its mobile banking service, delivering banking services to some of Scotland's most remote communities. Other banks would do well to look at such initiatives.

But closing branches is about more than banking. Banks have a social responsibility, especially those with long-established links with communities. Branches are a bank's link with its customers - a link that RBS needs these days, given the erosion of trust during the banking crisis.

Bank closures can also have a serious knock-on effect on surrounding businesses, particularly at a time when retailers are under growing pressure and many small firms are struggling to secure affordable lending.

Then there are the many people who still rely on their branch for their banking services, often the elderly and those unable or unwilling to use the internet.

Like closing branches, the idea behind scrapping cheques was to make life easier for banks. Yet again, the industry failed to understand the implications for many customers - maybe not the majority, but a large and loyal minority who deserve better.

The Treasury select committee has thrown an unexpected grenade into preparations for the biggest change in financial services for a generation.

It wants the implementation of the retail distribution review - which reshapes the way in which financial advice is given and paid for - put back a year to 1 January, 2014. Its reasoning is that advisers need more time to meet the standards required by the new rules, which include a ban on the commission paid by providers to IFAs and new, higher qualification requirements.

Yet virtually every company in the industry, from the one-man band IFA to the biggest insurer, has refocused over the past few years to ensure they survive in the new era. A delay in a project dating back to 2006 is the last thing consumers need and is unfair to the thousands of IFAs who have bent over backwards to get their house in order.