Almost 200 bank branches are due to close next year, with around 600 closures already confirmed for the years ahead. This continues a trend seen over recent years, with banks and building societies increasingly closing their physical branches and instead dealing with customers online.
While brokers said that such moves are actively boosting the advice industry, there were some who cautioned that banks were letting customers down by behaving in this way, and potentially falling short of Consumer Duty expectations.
Bank aren’t interested
Martin Stewart, director of London Money, said that it seems banks no longer have “the capacity, infrastructure or desire to provide wholesale market advice to the consumer”.
Instead they focus on only working with “loyal customers” and the most vanilla of cases, which leaves the market open for brokers to “consolidate their position as the dominant provider of regulated mortgage advice in the country”.
Bad news for the high street
The closure of so many banks is a “sad indictment” of our times, argued Michelle Lawson, director of Lawson Financial. She noted that banks had previously been “a stalwart of a bustling high street” but had now pushed people towards dealing with banks digitally.
Rhys Schofield, brand director of Peak Mortgages and Protection, said that the closure of bank branches was “terrible news for high streets” but a positive for brokers who could offer face-to-face appointments which are “desired by so many for the biggest financial decision many customers have to make”.
A better experience for brokers and clients alike
Richard Campo, founder of Rose Capital Partners, said that these days the majority of clients he deals with shop around for a broker rather than a bank, a trend which has only grown since the pandemic as “brokers were faster to adapt to video meetings and a smooth online journey vs the big banks”.
He added: “Clients don’t have the time or inclination to walk into a branch these days, certainly in our experience they prefer the convenience and flexibility video meetings offer as they can slot that into their day.
“From the broker perspective that is great as well as we do fewer evening or weekend calls now and can manage more in the daytime than we did in the past. So it seems like a win/win for brokers and clients.”
Pushing borrowers towards brokers
Lewis Shaw, owner of Shaw Financial Services, said that banks’ attempts to digitise their services “plays directly into brokers’ hands”.
He continued: “Why anyone would want to go and sit in a branch and talk about one set of products is beyond me when they can speak to an independent broker who considers hundreds simultaneously.
“As technology improves, brokers and consumers alike must change with it or face being left behind.”
Rohit Kohli, operations director at The Mortgage Stop, said that borrowers may increasingly turn towards brokers for “personalised, expert mortgage advice”.
He added: “The changing banking landscape not only reflects a move towards digitalisation but also underscores the enduring value of bespoke, professional guidance in the mortgage sector.”
Riz Malik, founder of R3 Mortgages, said that the need for local financial guidance was strong, but not an option from banks.
“This has steered more customers towards brokers, who have eagerly welcomed them and now outpace many lenders’ sales teams in generating business,” he continued.
Do borrowers want face-to-face help?
According to Ranald Mitchell, director of Charwin Private Clients, there is little impact on the mortgage market from branches closing.
He explained: “There will be a small number of people who like the personal interaction, trust and familiarity in dealing directly with a bank or building society, but they are few and will now find alternatives and move with the times.”
Graham Cox, founder of SelfEmployedMortgageHub, said that the move towards operating online more frequently was making it easier for independent mortgage brokers to compete for business with high street lenders.
“Some lenders, like Metro and Nationwide are trying to buck the trend by opening or maintaining branches., and there’s undoubtedly a market for face-to-face mortgage advice, albeit one that’s shrinking,” he concluded.
Lenders are showing disdain for their customers
Luke Thompson, director of PAB Wealth Management, said that the approach of lenders in pushing borrowers towards finding their own deals online shows the “disdain lenders have for their customers”.
He continued: “I struggle to see how not offering advice to customers and forcing them to pick their own deal via a website is compliant with Consumer Duty. These are the kind of consumer issues the FCA should be looking into in more detail.”
This point was echoed by Charles Breen, founder of Montgomery Financial, who said that with Consumer Duty at the forefront of everything financial firms do “by shrinking their high street presence banks are sending a clear message to the public about what they value and it’s not the consumer sadly”.
