Interactive Investor

Barclays U-turns on plan to scrap Post Office cash access after major backlash

25th October 2019 09:10

Edmund Greaves from interactive investor

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Barclays Bank has performed a U-turn on its decision to axe cash withdrawal services from Post Office branches after a backlash from customers and MPs

The bank initially announced its decision to scrap cash withdrawal services from Post Offices as a cost-cutting measure on 8 October.

But after a significant backlash from customers, media and parliament, the bank has now performed a 180 on the decision, and committed to the Post Office for at least the "next three years."

In a statement published on the Barclays website, Barclays Group chief executive Jes Staley says: “Barclays announced on the 8th of October that we were changing the nature of our participation in the Post Office Banking Framework going forward, and the consequence of that change was that, from the 8th of January 2020, our customers would no longer be able to withdraw cash from the Post Office using a debit card.

“Our decision, however, provoked a great deal of public and private debate. We have listened very carefully to points that have been made to us by ministers in the government, by MPs, and by interested charities and consumer advocates.

“Ultimately we have been persuaded to rethink our proposals by the argument that our full participation in the Post Office Banking Framework is crucial at this point to the viability of the Post Office network."

Parliamentary pressure

Barclays drew immediate pressure from parliament for its initial decision.

Last week, Moneywise reported a group of 124 MPs wrote a letter to the high-street bank excoriating the removal of the service.

The group, led by Welsh Labour MP Chris Elmore, accused Barclays of ‘dragging the carpet from under the feet’ of vulnerable customers.

The letter noted that of 3,312 bank branch closures since January 2015, 481 were Barclays branches.

Mr Elmore called on the bank to “start taking their responsibility to elderly & vulnerable customers seriously.”

Yesterday, newly-appointed chair of the Treasury Committee Mel Stride MP added: “The Treasury Committee has recently called Barclays’ decision to no longer allow its customers to withdraw cash from post offices hugely disappointing. I raised this issue as a priority in my first speech in Parliament as Committee Chair today.

“Barclays decision is hugely welcome.”

Post Office service future

But wider concerns about the future of Post Office services remains. Barclays does not shy away from highlighting this despite its reversal.

Mr Staley says: “Whilst we have concerns regarding the sustainability of relying on this model in the longer term, and want to work with government and others to address the problems inherent in it, we recognise that the Post Office is a network valued by many communities in the UK today.

“So we have amended our position, and will now maintain a full service proposition in the Post Office for our customers, including cash withdrawals using a debit card, for the next three years.”

Today, a statement from the Business Energy and Industrial Strategy (BEIS) committee published a damning verdict of the initial decision, but also highlighted the plight of Post Office services.

Rachel Reeves, chair of the BEIS committee explains: “Post offices are a crucial public service and perform a vital social role in our struggling high streets, helping to fill the gaps left by retreating banks. But our Post Office system is under threat.

“Sub-postmasters are working long hours and struggling to make a living, and the retailers running Post Offices are finding it hard to make them viable. If we want to avoid a bleak future of post-office closures, the government needs to step forward with a long-term funding commitment beyond 2021 to support the Post Office network.”

But Ms Reeves does not hold back from saying that high street banks, like Barclays, shoulder this responsibility too.

“The decision by Barclays to stop its customers accessing their own money from post offices is a petty penny-pinching move which has triggered a deserved backlash from small businesses and the public alike,” she says.  

“Barclays should live up to their social responsibilities, execute a swift U-turn and dump this policy. If Barclays are in any doubt about what decision they should make, we look forward to questioning them in the coming weeks on the impact of this move for customers, small businesses and post-masters.”

It appears however, Ms Reeves will now not get the chance to cross-examine the firm over the initial decision. 

This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.

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