 Welcome to the 20th meeting of the Economy, Jobs and Fair Work Committee for 2018. I ask everyone to turn off electrical devices or turn them to silent, please. Item 1 is a decision by the committee to take items 3, 4 and 5 in private. Are we agreed on that? Yes. I will now ask for any declarations of interest that committee members have. Kezia Dugdale I declare that I am a member of the Capital Credit Union, which is a member of Abcool and I am also a member of the Capital Community Bank. John Mason If I declare that I am a member of the Parkhead Credit Union, then I am a member of the Parkhead Credit Union. Thank you very much. This morning, we continue to inquire into the impact of bank closures. We have with us today a panel of witnesses, whom I would like to welcome. First of all, Karen Hearst, who is the policy officer from Abcool Scotland. Gordon Buchanan, the general manager of Castle Community Bank. Kathy Gregg, chair of UK credit unions and Martin Kiersley, director of banking with the Post Office. Welcome to all four of you this morning. Thank you for coming in. I understand, Martin Kiersley, that you have also one of your colleagues, Mark Gibson, who is in the public gallery that you may confer with on particular issues as we progress. The buttons and everything will be dealt with by the sound desk, so no need to press any buttons. Do feel free to come in on any questions but don't feel you have to answer all of them. There will be an opportunity to submit further evidence in writing after the session if there are issues you feel you would like to add something to your evidence, what you have said today. I'll start with a question, perhaps a general question, on the impact of bank closures. Can any of you comment on that impact of bank closures on businesses, individuals and the wider community economy in areas that you are familiar with? Gordon Buchanan? I think that we've been doing some work with a local group in Juniper Green and Corry who are concerned about the fact that there is literally no branches available in that part of Edinburgh at all, no Bank of Scotland, no Royal Bank of Scotland is the last Royal Bank of Scotland closed quite recently. Attending a couple of public meetings with myself and the chair, I think that we noticed that there's a strong concern, especially amongst the local business community and also the elderly community in those parts of Edinburgh who, for the business community, there's a concern about being able to bank cash because they're literally nowhere if the branch disappears, there's nowhere for them to actually bank the cash. I think that for the elderly community there's also a concern about their use to perhaps going into their branch and actually transacting with somebody face to face and for many of them they're not even used to happy using an ATM or never mind online banking. So there was real concern that we picked up from those two sectors of the community in that part of Edinburgh. Thank you, Martin Kearsley. We've certainly seen a significant growth in our business in supporting communities as bank branches close. We essentially offer cash services to the local community, so what we don't do is set out to replace a bank. There are many services that banks have to continue to offer about their own products, mortgages, life insurance pension and so forth for which you need proper independent financial advice, but from a post office perspective our role is to support the communities that we are placed in. We have about 1,400 branches across Scotland, we have modernised over 700 of them in the past few years and we've got a stable network that hasn't been this stable in decades. Since 2009 we've had about 1,440 branches and that's now 1,403 or so, so we have a stable network that is there to support the communities. We offer cash services, cash withdrawals and cash deposits and when a bank branch closes, if there's still a bank branch in the town we see a marginal increase in the business over our counters. When the last bank closes that's when we see significant change. We see something like a 10% increase in cash withdrawals, so our logic for that is that all of us as individuals will find other ways to withdraw cash, either supermarkets, cash back, ATMs, goes to the next branch, we find different ways of collecting cash, but to Gordon's point local businesses need a counter in order to pay cash over and we've seen about a 25% increase in business cash deposits over the last year as a result of bank closures. It's becoming a very important part of our business. There are three business areas that we focus on, obviously males is the main one, banking is second and traveller is third. Our banking business is growing significantly and it has a direct result of bank branch closures. Before we come to Cathy Gregg, is that economically viable for the post office in terms of the banking transactions that you've seen an increase in? I think if we look at the percentage or the ratios of those different types of transactions, withdrawals account for about 80% of all the transactions that we do. Those withdrawals are well remunerated, they are very quick and easy transactions and they normally happen at the end of some other transactions. A customer will come to the counter, post, parcels and at the end of the transaction, postmaster will say, would you like some cash today? It's an add-on transaction, very straightforward. The challenge is business deposits and because that's been growing so significantly we recognise that we have to rebalance how we remunerate our postmaster. Business cash deposits coming in require counting, it requires preparation for remittance and we also expect postmasters to at least be the first stop in detecting counterfeits and frauds coming through. There is a much heavier load on postmasters to handle business deposits and that's the one that's growing fast and that's the one that we're looking to rebalance but we do recognise that the remuneration for business cash deposits coming in is currently out of balance and we are working to fix that. Within my role in the building I work with other credit unions and they find now that they have to keep more cash in their premises because they can't get it banked easily and if members come in to take out money they can't give them a check and send them to a local branch because there is no local branch now so credit unions are now paying more insurance to keep more cash on premises. Members of the credit unions are now having to travel further to make deposits into their branches. One credit union has a 15mm there and back to take their cash to deposit into a bank because there there's no banks in their area. We also work with the schools a lot and we try to teach children how to save but you can't follow up with now you've got your money you take it to the bank and this is where you put it we have to do that on behalf of the pupils now because they have to travel because the the closed down of the banks makes it very difficult to make cash deposits. We also have people coming in the credit unions to draw out five pound to travel to their bank when they have trouble with their account because they can't manage the the computer to get through to speech a human being so we have people coming in lifting their small amount at the credit union to help with the travel to get to the bank. Thank you. I don't know Karen Hurst did you want to come in? Just to reiterate what both Gordon and Kathy said, we represent most credit unions in Scotland. I was with a bunch of them last night and I asked a question and most of them agreed to see a significant increase in inquiries from the community of people who the bank and service had been withdrawn and they were looking for alternatives. For credit unions it prompts some challenges and difficult questions. As Kathy said, issues such as cash handling and transactional accounts are not cheap to provide so our credit unions are very much looking at what they can offer whilst acknowledging those limitations to what they can do. Over the years we have seen very many bank closures and it would appear that the high street banks are on a continuing basis pulling back from the high street. We have towns and villages who do not have banks at all. Does that not create an investment opportunity for the post office and credit unions to move in behind the retreat of the banks? I would say that taking advantage is possibly a bit too much. I think that what we would emphasise is that obviously there is an industry in huge change, probably a once-in-a-generation change, and that reflects how all of us consume banking services these days in the same way that we consume any other service. We research online, we look at reviews and we make choices. I think that the banks are making a change and without apologising for them in the slightest, they are reflecting the change in how we consume banking. That does give us an opportunity, maybe not to take advantage but to support the communities that we serve to be the place where cash can be deposited, cash can be accessed. There is no need to travel to the next town, absolutely, you can go to the post office in that town. We have invested a significant sum over the past few years in modernising the post office network in Scotland. As I said, we have modernised nearly 800 of the 1400 branches that we have. We have moved to change the way that we handle banking transactions. We have note counters, we have time saver pouches in terms of how business customers can deposit cash more quickly instead of having to wait while the money is counted at the counter. We are starting to work with credit unions to offer broader services to a wider group of customers so that they do not have to withdraw £5 to travel to the bank. In doing so, we are also working with the Government, both national and regional, to raise awareness. I think that the problem is one of awareness. If you look at the RBS closure plan, 45 of the branches that they are closing are within 100 yards of a post office. Far be it from us to force people to use a post office but if we can make it a welcoming and secure and safe environment, one that is beneficial to the postmaster and the community, there is no need to travel several miles to go to the nearest bank branch. For those daily transactions that keep the local economy fuelled, there is the post office. This is coming from an accrediting perspective. For us, some of the challenges are that first of all, as a sector and in particular as a trade association, we are very much keen to move forward to grow the sector, to become more relevant to our members, to provide a wider range of services. The problem is that we all live in an economy where there is the expectation of banking services being free. Your current accounts, your cash service, all those kind of things, there is no expectation that those will be paid for. They need to be subsidised from elsewhere, which a bank will typically do by providing other services. We are unique in financial services in that the legislation says both that we can't charge, we are limited in the interest rate, but more importantly, we are restricted in what range of services we can provide. For example, we can't provide credit cards, we can't provide insurance. For us, as a trade body, that's a priority to try and get reform of the credit unions act, to try and allow us to be more relevant to members. In the meantime, it means difficult decisions, as Kathy says, as to how much cash we can keep on our premises and what we can offer in terms of transactional accounts. We're hoping to move forward and to grow the sector so that those decisions become easier, but it's got to be seen as a journey. There's no easy solution there. We are picking up on some of the, I think, credit unions are seeing a transfer of savings from the big banks to credit unions. People are disillusioned with the bigger banks because of the bank closure programme, because of the way in general they may be treated by the big banks. They're walking with their feet as far as the savings is concerned, and they're definitely seeing anecdotally the maximum deposit. We can accept this £15,000, but we're seeing a number of people walking the door with checks for £15,000 saying, I'm leaving RBS, I'm leaving Santander because of the way that I'm treated by them. We are picking up on that, but, to Karen's point, the idea that we can somehow start offering money transmission accounts and offering current accounts with direct debits and standing orders is very difficult because those accounts tend to be very expensive to run. Karen picked up on the point about cross-selling, and I think that you probably find that the banks will say, and there's some truth in that, that they don't actually make any money out of running current accounts, what the current accounts provide them with is data about other services that they can cross-sell to you, like insuring some mortgages or the like. It's hard for credit unions to step into that space without, as Karen leads to, significant funding from central government. Also, why does the reform, because the current act doesn't allow for the sector to offer those services? Previously, when we took evidence, people talked about challenger banks, which are actually quite small, whether they could step up and step in. The feeling was that, simply because of their size and the investment that's needed to open an all-singing, all-dancing branch of a bank, that was a complete no-no. Is there a lower-key approach here? The post office in part has already done that, but is there any solution that, in a combination, would replace the services that banks currently offer on the high street? I take that one. I think that the points raised by my fellow panellists are very relevant in terms of vulnerable and, potentially, the weakest members of our society and how we serve them. We are within a mile of 99.7 per cent of all urban-deprived areas. We all recognise that we have post offices in some of the deeper parts of most villages and towns. Our role in serving those members of the community is really significant and growing. At the moment, to give the committee an example, we are working with the Department of Work and Pensions, because, at the moment, there is a post office card account, a single poker, which is of huge value to some very, very vulnerable people, those with chaotic lifestyles, those without credit history, those who can't get access to a normal bank account. In moving from the poker product, which DWP wants to do, there is no option at the moment, apart from going to a bank account, which, as my colleagues have said, is an expensive proposition, and many of those customers can't make the jump, and they can't get past the know-your-customer regulations. In working with credit unions, to be able to offer, and those challenger banks, to be able to offer a branch network that essentially replaces the investment that they need to make so that they don't have to go and create a branch network, there is already one of 11,500 branches—1400 in Scotland—we can offer services over the counter that any normal bank branch would offer to keep the cash going. To that end, we are working with credit unions at present to be able to move from full-service bank accounts down through basic bank accounts and down into credit union accounts, which will give a lifeline proper transactional accounts with a six-digit sort code and an eight-digit account code, so universal credit can be paid on to those accounts, direct debits can be set up from them. Those customers who can make that step can access the kind of lower-rate utility bills that we can all enjoy. In a way, we are eroding the poverty premium by being able to give access to those customers. That is something that we are very proud to work with the credit union organisations and the challenger banks to bring to service in the next six months or so. You have focused on that particular aspect in helping the vulnerable members of society, which is really important. However, there is a huge block of people out there that are looking for alternatives. They are also disaffected with the banking services that they get, with the attitude of the banks, and they are looking for an alternative. Is the post office going to be a credible alternative? Have you got that level of investment that would allow that? We have in terms of servicing all partner banks, credit unions, building societies and anyone who wishes to make use of a counter service in order to transfer cash to and from. In terms of creating a post bank, for instance, obviously with banking regulations and legislation as it currently is, the investment into the post office would have to be in the billions in order to create a strong enough balance sheet that would pass banking regulations to be able to prove capital adequacy, to be able to support the financial services compensation scheme. In doing so, investing that much money would require us to have many millions of direct customers. The only place that we would get those customers from would be the existing banks and communities that we already serve. There is a circularity involved in saying, let's just create an alternative from scratch. The challenge that we would have there is that we would effectively alienate all the customers that we already serve in trying to move them across. There are some real challenges in trying to create what you might call a viable alternative to replace the daily services that we already offer. Whilst we continue to look at and watch and try to understand how we would modify in order to create something like that, I think that there are some serious barriers at present that would require significant investment to try to overcome. I just want to pick up on a point about the POCA, about the Post Office cash accounts and the DWP's efforts to get people to close those accounts and move to normal bank accounts. It's just a point about the branch closures, when the branch closes. I think that this is an important thing that we'll probably come to later on, perhaps, as the ATM goes as well, so people don't have access to their—we don't just not have access to the branch any longer, they actually don't have physical access to the cash because they—and often when people do are successful in opening a bank account with RBS or whatever and they're moving from a POCA, they'll be given a basic bank account, so they'll be given a cash card rather than a debit card, so the only way that they have access to their funds is by cash. I think that that's quite an important point around branch closures and the ATM disappears at the same time. Now, John Mason. Thank you very much, convener. I think that I'm particularly interested in some of the Post Office stuff, but some of the other questions will come up. Can you explain to us the difference between—we've got Post Office money and is it actually a bank or is it just—is it linked to—there's AIB that you've got a relationship with, I think, as well? Is that right? Also, you can go into other bank accounts. I could come in with my whichever bank I'm with and do some transactions. Can you just explain how that all fits together? I can. Post Office money—you're quite right—is a relationship with Bank of Ireland. Post Office money is a rebranded set of Bank of Ireland products, so that's where you could quite happily have a current account for the Post Office. You can have mortgages, insurance, life insurance, pensions and so forth. They are separate products that we sell through the Post Office. Typically, in the past few years, we've tried to sell them over the counter, but as many of you will know, if you walk into Post Office with a transaction in mind, I want to do what I'm doing today and go somewhere else. I'm in to post something, I'm in to whatever. The chance to say, well, whilst you're buying a stamp, we'd like a mortgage is a pretty significant leap. Selling in store really doesn't work too well, so what we now do is we may start the journey in the branch, but then it's completed online or it's completed through conversations with health centres and so forth. That's Post Office money—a separate set of products that we sell to customers who wish to have a Post Office product, but they are essentially Bank of Ireland products behind us. Individuals and businesses? It's individuals. It's not business. It's us as personal consumers. On the partner banking side, we created a few years ago called the banking framework, essentially for 20 years plus, ever since Jara Bank days, which has morphed into Santander over time. We've provided cash-in and cash-out services for all banks. They became incredibly fragmented over the past few years—different banks, different requirements, different services, whether it's a barcode or whether it's a MagStripe card or whether it's a chip and pin—various different services. We've standardised it all about two years ago and said to all banks, if you wish to use a Post Office, your customers will have to be chip and pin, so it is essentially the same thing as using an ATM. It's a card into the machine, pin, amount of money and away we go. We've standardised and simplified the services, and we offer that service for all banks so that we say about 99 per cent personal customers and about 95 per cent of small businesses you can access your current account through any Post Office. There are the two different types of service. One is a partner banking relationship and the other is a specific set of products that we can sell. I don't know if I'm unusual, but I don't go into my bank either, looking for a mortgage or insurance or any of those things. I just want to get my money in and out of my account and that's it. Are there any limitations on what you can do? Businesses were suggesting to us that there were limits on how much change they could get at a time or how much they could deposit at a time. Are there limits on those and if so, why? Okay, so with apologies for the detail and do please stop me if this gets too detailed. We offer a service, basically an ad hoc walk-in service for all businesses and about 90 plus, 92, 93 per cent of all business deposits are less than £2,000. So you can walk into any Post Office and deposit up to £2,000 into your account anywhere in the country. There are many businesses that go way above that each week. Around about 4,000 of our 11,500 branches take in over 80 per cent of our business deposits. Those branches are the ones that we invest in in terms of fortress. You might recognise the perspex windows and a specific area where business deposits can be made. They're the ones that we will direct customers with larger sums of money each week. We will locate them. It's called a location exercise. We work with the bank and that customer and we introduce the postmaster to the business and say, if you want to take £20, £30, £50,000 a week and deposit on a Thursday, you've got to go to this post office, they'll welcome you, they can take the money securely, we can save it and dispose of it. So there is a limit of £2,000 for any post office, but in specific areas and across those 4,000 we can take any sum that the business cares to deposit. In that case, there are no limits, if you like. It just has to be arranged. Any other limits, in terms of cash, there are no limits if a small business wants to withdraw coin and cash for an opening float or for temporary workers through the summer season to pay cash to workers. You can draw any amount of cash that you wish. What we ask for is a 48-hour notice so that we can provide literally a block of change when they come in, house brick-sized lumps of coin, we'll deliver that to the branch and that can be collected by the customer. It just requires pre-arrangement for some of the larger sums, but that if a small business doesn't know that and we're back to the point about awareness, if the small business doesn't know how to operate their account through us, we're very happy to help, but we need to raise awareness collectively to the banks and the post office and government. That's very helpful. If I could switch to the credit unions, I mean, am I right in saying, because you've all said a little bit about credit unions, that there is a huge variety and that some are pretty big and almost like a bank, and some are absolutely tiny and seem to provide very few services. Am I misunderstanding that or is that correct? There's huge variation in credit unions, as you say. I mean, the smaller ones probably just do the savings and loans, which is what credit unions serve, isn't that true? I've got, for example, in my constituency, I've got the police credit unions based there, and they strike me as quite a big professional kind of thing. And then Glasgow, I don't know what it is, what it's actually called in Glasgow now, but there's a huge one that used to cover, I think, everyone in Glasgow or the council or what else? Scotland and Glasgow credit unions. Glasgow is the biggest credit union in the UK. Am I right in saying that they provide more services than my little park head one? Yes, they will. Although, as I said earlier, the challenge is the legislation, so the main act that bounds us is the credit unions act. It basically says that we can order offer savings and loans a couple of services around that. For example, it's typical that if you take out a loan, you would get insurance as part of that package. In most cases, if your savings will be insured as well. A few credit unions offer mortgages as well, although it's very few. Obviously, they can offer transactional accounts, but, as I mentioned earlier, there are challenges around the costs of that and how they make that sustainable. Do you do debits and standing orders on some don't? In terms of direct debits, many would offer that. It wouldn't be into a current account, as you might expect, with a bank. What usually happens is that it's a pre-paid card that's offered through the credit union. Many people have their benefits and sometimes their salaries paid into the credit union account. That's transferred on to the pre-paid card and payments can come off of that and it can be used in the way that you may use a debit card. I couldn't pay my TV licence or that kind of thing through my credit union account. The problem with a lot of the pre-paid cards is that the cash machines that you go to with those pre-paid cards get charged £1.52 for taking the money out of that hole in the wall. Again, the people who are the most vulnerable, the most least able to afford those charges, are being charged for using those pre-paid cards. It's been invaluable for the sector to be able to offer a service to people who would otherwise not be able to access bank accounts. That's mainly why we've embraced it, because so many of our members were making approaches and what we could see is the best solution. How many people in Scotland are members of credit unions? I think that two of the committee have declared today that they are, I don't know if that means all the others, Ireland. It's about 7 per cent of the population. 7 per cent, which is quite low? Yes, it's better than the rest of the UK. It's about 2 per cent in England and Wales. Higher in Ireland? In Ireland, membership is higher. The credit union sector is very well developed. Thank you very much. I'm 24 per cent in Northern Ireland, which is the last figure I saw. Good morning, panel. I've been in the Castle Community branch in Granton, I've been in the one in Craigmill, and I was delighted to be at your opening in Leith two weeks ago. Why are you opening a branch in Leith when everybody else is moving out? Precisely because everyone else is moving out. We make money from lending. We're there as a savings and loans business, just picking up on what Karen was saying. We don't offer any of the other services, we don't offer those prepaid debit cards precisely because we think that being charged money to take money out of a hole in the wall is a nonsense. We provide savings and loans, and it's the lending that we make our money on. We would lend up to £7,500 and a minimum of £250, and we see a whole raft of people from up to £7,500 to £250. Communities that I've named are fairly deprived communities. Could you explain for the record's benefit why it's quite important for credit unions that people with means are also members and use credit unions to borrow? We're very conscious that credit unions are sometimes seen as being a poor man's bank and a lender of last resort, and we want to get away from that. We're there for everyone in the community in Leith. Leith is a very diverse community, there's a lot of poverty, there's a lot of wealth in that part of Edinburgh. We're there for everybody. It's really important that people who are—who may have a choice about where they borrow from—it's really important that they consider credit unions as a source of funding for their new car or their new kitchen. We offer competitive interest rates, rates that are competitive with the big banks. That lending to the people who have a choice allows us to do more lending to the people who don't have a choice. In all honesty, despite being a co-operative MSP, one of the main reasons that I joined capital credit union first was that it was harder to take my money out, and therefore I was less likely to spend it. The truth is now that you are as competitive as banks. It makes a lot of sense for me to borrow from my credit union as well. However, in order to appeal to more middle-class communities, rather than just serving poor communities, you need to have the same functionality as high-street banks do. I know that a couple of years ago a huge amount of money went to Abacol to modernise your IT systems. Can you talk to us about how that's working? Is it now possible for people to access their credit union accounts on phones, for example, in the same way that I might expect you with my Bank of Scotland account? What's missing there in terms of the functionality with high-street banks? There's definitely a need to keep pace with that technological advance and to answer your question. No, we don't have an app. The kind of money that would be required in order to develop an app is prohibitive for us in terms of the capital. We have a very strong online presence. It's about to get stronger. We're launching a new website very soon where people can apply for loans online and get an instant decision. However, we can't accept deposits online. People can't transfer the money that came to Abacol to modernise IT. That was Government money, so is there not a role for there to be Government support in helping to modernise some of the IT infrastructure? To be honest, that project proved to be pretty challenging. It's still on going, although the DWP were no longer in contract with them. I think that it's moving in that direction. We certainly, when our members get together at conferences and so on, that's very much the direction of the conversation. Even the smallest credit unions are now exploring and working to improve on. It's difficult without, as you say, the margins that a bank might have. We would certainly encourage any Government, if it felt it could, to be talking to the sector about investment in that area. However, there's a lot more options out there and a lot more credit unions explore in it. It's definitely the direction that we want to move in. One of the reasons that I was so happy to see Castle Community Bank set up in Leith is that there are 11 payday lenders in the centre of Leith. Capital credit unions provide things like fast cash where they can access up to £500 a day in the same minutes as a payday loan. I know that there's a debate within the credit union community about whether or not you want to promote such unsustainable forms of finance like that. Could you remember to talk to us about how important it is to be able to access same-day lending in small amounts so that you can compete with companies like Brighthouse versus trying to properly focus on more sustainable lending? Kathy might be hearing from you on that. Within my own credit union two years ago, we launched the instant loan where a member does not necessarily have to have a saving history to join and access funds for the credit union. That is because we had a leaflet drop from not a payday lender but a doorstep lender in one of our poorer areas, so we went behind them and done our own leaflet drop. I can see it, you can't. Take £500 from the credit union and you'll pay back £36. Take £500 from Provident and you'll pay back nearly £1,000. It's no comparison, but the credit unions need to be of a level where they're geared up to do that. They have to have the things in place to assess the loans. Sometimes they need staff. A lot of credit unions don't have paid staff, so they work with volunteers. That's quite a responsibility for a volunteer to take on, to assess a loan or put in a new product. Most credit unions are trying to move along that line because we're trying to combat the illegal money lender, which we know can be a problem in a lot of other areas. We've paid money to a member to help pay off and we've reported it on, so credit unions have a big responsibility in that area. From my experience with the credit unions, we work with. Most of them are trying quite hard to help combat the issue of high lenders. I just wanted to come in on a couple of comments from my colleagues here. Gordon, you just mentioned that there's a number of things that can't be done by credit union customers online. You can't withdraw cash. You can't get access to your accounts apart from seeing what might be in there. It's very important for us to try and help the credit unions to be able to offer services at sensible interest rates. We just heard some of the more extreme examples. If we look at the POCA customer base, there are a large group of remaining customers in POCA who have some very significant balances. In aggregate, there is around about £1.5 billion worth of credit balance from customers in POCA who are being encouraged to move elsewhere. In moving from POCA to a credit union account, they will take with them their balance. As that £1.4 billion breaks down into individual amounts, it will move with that customer, with their account, to a new provider. To be able to provide access to credit union customers from a post office in all those deprived areas that we just talked about is one of our fundamental starting points. If we can assist in moving the POCA customers to a credit union to take with them their credit balance, it may then give the credit unions the opportunity to earn more from the balance and therefore be able to offer out better loans and different loans and different products, thus, again, helping to break down some of those poverty principles. It is a combination between offering a branch network to an organisation that is offering ethical finance to the most vulnerable. I think that all of us have a role to play in how that is actually delivered into those communities. No, it is not. Sorry, it does not mean to imply that it is just about poor people. Absolutely. Some of the people with POCA cards are very wealthy people. As Gordon said, it is not about a bank for poor people. It is an ethical choice, absolutely right. On the back of what you have just said, make the observation that it was not that long ago that post offices were closing down branches as well. A degree of caution is required that that is not necessarily the entire answer, because some communities have nothing at all. Can I talk to the community banks and credit unions first? It sounds from what you are saying that there is a desire to provide more services. I need to understand, as does the committee, what is stopping you. Is it legislation? Is it financial support to develop infrastructure? What is it? I would say both of those. What would need to change? We have a couple of priorities as a trade association. First, as I mentioned, we were seeking legislative reform in Westminster to enable us to offer a wider range of services. We have also got some concerns about recently introduced capital requirements. The larger credit unions have got a new requirement to hold 10 per cent of capital. For those who are on the cusp of that threshold, it is a difficult chicken and egg situation. You cannot get the capital without serving more people, but you are restricted in how many more people you can serve because you do not have the capital. Investment in the sector is a big issue. We have been working with Woods Bank for a number of years, and they have invested a lot of money in credit unions who are lacking capital. We also have smaller grants for things that will help them to grow, for example, technology. That has come to an end, although the Department of Culture, Media and Sport has a new £55 million financial inclusion fund. We are working with them to try to have similar arrangements in place to support the sector to help it to grow. In terms of the Scottish Government, they have announced last year in the programme for government that there would be a credit union awareness campaign, so we are working to work with them on that. I think that it will be one slater this year. I think that visibility is sometimes the biggest challenge, as we have discussed earlier. 7 per cent is better than the rest of the UK, but it is very well. We think that there is a huge potential to grow our sector, to offer savings and loans fundamentally to more people, but with a long-term view to be able to serve in a wider range of services as well. I take this agreement across all three of you on that point. The Scottish Government used to have a development fund for credit unions. Does that exist any more? I have recently launched a loan fund, which is £1 million. I believe that the Scottish Government has matched that £1 million, but that is the only loan fund that I am aware of at the moment. I am old enough to remember that there was one previously. If my memory is right, there was much more than maybe £1 million or £2 million in it. It went into double figures, but it strikes me that some of the capital investment that you are talking about in infrastructure that would benefit all credit unions, such as the development of apps or digital platforms for you is something that could conceivably be done by Government. Can I tease out some of the bank stuff? Of course, credit unions bank with banks. How helpful are they in working with you as a customer of theirs, given that you are a local branch? I think that it varies with whatever bank you are banking with. Can I say banks? Is that allowed? The Bank of Scotland is quite good with the credit unions. They do not charge for depositing money in, they do not charge for writing checks. Other banks charge as much as £30 or £40 for a credit union to write a check for a member to lift their money out, which impacts greatly on the credit unions' profits. They also have to pay to deposit their money in, so much per thousand. I am not sure how accurate that is, but from what I can gather, a credit union that joins the Bank of Scotland now will have the charges, but they do not charge credit unions that have been with them a while. We have been banking with them for about nearly 40 years now. We have a good work relationship, but I work with other banks that are struggling to manage the banking fees. There are credit unions who are picking up the slack in towns where the banks have left, and you are being charged for the privilege of paying your money into the bank. That is extraordinary. We are also in the unique position now that our money is not protected in the bank because we lost the compensation. We do not have that now. Although our members money to credit union went bust, the members would get their money back. If the bank goes bust with the credit union holds its funds, the credit union will probably go because there is no compensation for the credit union's funds. There is a role if we want to see credit unions in the future spreading across communities and going where banks do not go. We need to strengthen the financial and the legal framework that you guys operate under. I suppose that we are reacting just now to the immediate branch closures. I have no doubt in my mind, despite what various committees have said and various Governments have said, that the bank closures will continue. Do you see yourselves as the bank branches of the future? Are you capable of replacing those bank branches? Do you want to? That question is open to everybody. So, maybe we start with Martin. I would be delighted. We do not replace bank branches. We do not set out to replace the branch. In effect, this is not about us supporting banks in any way. This is about us supporting communities that we serve. As I mentioned earlier, our real focus is making sure that the money that revolves in the local economy stays in the local economy. That is proven in numerous reports. Obviously, if the money moves out of town, it is not coming back. Our role is very firmly to support the communities in those daily transactions that they all need to survive. It is not about providing other bank services—as we talked about earlier—things like a Lloyd's mortgage or a Bank of Scotland pension. Those services still have to be supported by those individual banks. Our role is to support the communities by giving access to those bank accounts through our counters. We welcome being a branch, but not necessarily being a bank. I think that perhaps we would see credit unions as part of a solution, hopefully, but I am not sure that I could say that we would see ourselves as the solution. I mean, I think the problem with, if you wanted that to happen, if you wanted us to be the replacement for the retail banks, firstly, it would require all the credit unions to actually potentially merge and become one credit union. I think that that is a huge ask in the first instance. Secondly, I think that in doing so, credit unions would lose their local community focus because of the capital structures and the liquidity and so on that Martin alluded to earlier on. It would be required for that. I think that that merged credit union would just become like another mega bank and it would lose its identity and its community focus. I think that that is very important. To Karen's point, we are part of the solution, but I do not think that credit unions are going to be able to replace the high street banks. Your message is to keep bank branches open? On the message of keep bank branches open, I want to look at the post office to see if there is real potential for them to continue to provide a service to the community. There are 1,400 branches that are mentioned in Scotland. How many of them are sub-postbasters, as in franchises, as opposed to main post offices? I do not have that information, but I will write back to you. Did you see it as a substantial proportion? It is a substantial proportion. We work with, there are something like across the country, out of our 11,500 branches, there are 300 owned branches that you may have known as crowns, they are now called direct managed branches, DMVs. Of the remainder, probably 80 to 90 per cent would be agencies, where there are independent businesses in retail outlets, convenience stores, running post offices and the rest would be in third party partners, such as W.H. Smiths, McHolls and so forth. I will come back to the committee with a written response on that one. In terms of services provided, is it the same level of service between the main post offices and the sub-postmasters? As I explained earlier on, there are certain services that are absolutely ubiquitous. Every customer of every bank can get every service in every post office. Where we have particular outliers, and that is typically larger businesses that want to bank with a sort of deposit their cash through a post office, we will make specific arrangements, but pretty much, as I said, up to that £2,000 limit, any post office, up to the amount of cash and coin each day, any post office withdrawals up to the amount that your cash card will allow from your bank, any post office. There is a ubiquity of service across our estate, which should be serviced in every possible post office. What conversations take place with a local sub-postmaster when a branch closes? We have had wholesale branch closures in my constituency, bank branch closures, and the banks have always said that we have an arrangement with the post office, but when you go and speak to the sub-postmaster, nobody has spoken to the sub-postmaster. What steps are put in place by the post office to contact the sub-postmaster when a bank branch closes? To a certain extent, it depends on how willing to communicate with us the bank is. In some of the bank's very close communication, and in those instances, we work with the bank to identify our nearest four or five post offices, and we talk very specifically to each and every one of those postmasters or mistresses about the services that are likely to come to their branch, in which case we are well geared up. In several other cases, the banks are less communicative and announcements just happen, in which case we are caught out. We do not have that level of communication from them, so we have to then run around after the event and talk to the local postmaster mistresses and explain what is happening. It depends very much on the bank's willingness to communicate. In many cases, the vast majority, we have something like 12 to 14 weeks' worth of notice before a local branch closes. In other words, it is after they have made the announcement, after they have discussed it with Unite and various other stakeholders, and it becomes public knowledge. We then hear about it and we start to work with the postmasters around that area. In terms of that 12 to 14 week window when you are made aware of it, what do you do in local communities to raise the awareness of services that are available to the community effort bank branch closures? At the moment, we work with the closing bank. Typically, we put our postmaster mistresses in touch with that closing bank branch manager. For some of the most vulnerable customers, we effectively, in some cases, literally walk them to the post office, introduce them to the staff, show them what services they can access, and this might be either physically disabled or mentally challenged or just financially less aware customers. We make sure that they are very specifically handled in the migration. Moving into the general population, the bank typically writes to every one of the customers of that local area and informs them of the closure. Again, it does depend on some banks. We have seen the worst instances of being a piece of paper with a handwritten arrow on it saying post office is around the corner. We try to do better than that. With writing to the customers, with our own branch managers, we run particular campaigns in the branches. We will put up information sheets specifically addressing bank X customers. You can now bank at the post office. Around those branch closures, I think that there is far more that we should all be doing. You may be aware that the economic secretary of the Treasury in the UK Government has challenged the banking community and the post office to do much more to raise awareness. It is something that we fully support. General awareness in the population is around about 30 to 40 per cent that you can bank at a post office. We would rather do that with 60 to 70 per cent, or as high as we can get it, to make sure that everybody knows when a bank branch closes, post office is there for you. You have indicated that the vast majority of post offices are franchises part of another business. There is concern out there that there is a lack of privacy. There are concerns about security and staff training. What are you doing about addressing those issues? In reverse order, staff training, everybody who operates the post office system, post office terminal, has to go through terminal training before they can serve customers. There is something like 300 different types of product that our system supports. We train counter staff on every one of those before they become customer serving. In terms of security, I recognise that there is a privacy issue. Quite rightly, if you have a very small branch and you have someone purchasing convenience goods right beside someone wanting to withdraw a couple hundred pounds, there is a time and a place for that conversation. It is challenging. Again, we have to recognise the physical infrastructure that we work in sometimes. In general, security has actually improved. There have been less instances of theft or crime or violence in the past two or three years as we have moved to a more open plan model. It is the same thing with banks and other organisations that offer financial services like this. You have a counter in place and people on either side of the counter. I do not know why, but for some reason there is more attempted crime in that model than there is in an open plan one. I think that it is to do with the amount of money that is kept in an open plan area. It is less. The rest of it is in the safe, time locked. It is an interesting statistic that is probably worth further investigation as to why, but we see that it is more secure at that open plan level. On the network itself, you made a point of saying that between 2009 and today it was roughly 14. That stayed fairly level at 1400. You have only modernised 800 branches. Is the intention to modernise the other 600? Or is there a danger of more branches closing? The reason for asking that is that, as Jackie Baillie mentioned, in 2002 there were 1,900 branches in Scotland, 25 per cent of the networks had already been cut. If you look online, there are currently 40 sub-post masters who have their business up for sale, including one in my constituency at Buxton. The estimated fees that sub-post masters earn is as little as £2,500 per annum. I mean, how stable is this 1400 network? It's a very good challenge and I can't speak for some of my other product colleagues in terms of the overall product mix and remuneration, but as I've mentioned, in terms of banking, my own area of responsibility, I recognise that business deposits is the main one that post masters have a real challenge with and we are working to address that in physical ways, as well as fixing the remuneration from paid. There is no doubt that the post office model, just like every other retail model, is under pressure on the high street and we have to continually look at it to make it a viable business. To a certain extent, we are mandated to be in the high street, that's what our government mandate is. 99.7 per cent of the population should live within three miles of a post office, that's what we deliver to. To support that, we obviously need post masters and mistresses to take up the challenge. We need to make that viable for them. I have no challenge with your question that it is difficult, in some instances, to make that work. You've asked whether we're going to carry on refurbishing and renewing the estate. Absolutely we are, but again, it's almost like a diminishing graph, if you like. We've done the vast majority who are wishing to take advantage of the fund and to get modified and modernised, and we are working our way through the tail, and it's a large tail. It goes out to the Highlands Islands, it goes out to the tips of Cornwall. In some of our remote locations, we need to create that business model that's going to help, that will therefore sustain the post office and renew and refresh when we keep it going. My last question is to Gordon Buchanan. Juniper Green, in my constituency, the post office, of course, closed prior to the bank branches closing, and it was happening to hear that Castle Community Bank is considering putting in a mobile bank vehicle. Can you give us any more information about that? We are still in discussions with RBS on the provision of one of their used vehicles. I'm hoping that that will happen very soon. The idea is that we would use that vehicle for two purposes, one, to promote the bank, and two, to provide mobile banking services in areas that are currently served. Although I understand that RBS has now decided to provide some limited services in your constituency. Watch the space, we're still getting there with RBS, things move slowly. We're confident that that will come to pass very soon. You said earlier about the prospects of establishing a post bank. That was one of the demands from the consultation that was carried out on the post office services in 2016. You said that the risk was that your existing customers might see that as a threat. You talked about post office money, which is backed by Bank of Ireland, which provides your ATM network and already provides banking services. Why do you not see the customers perceiving you that as a threat to their existing banking? How actively are you trying to persuade customers to join what is in effect a bank that is just not run by you? We've got some tens of thousands of customers in a post office current account right now. You're quite right. The banks, when we worked with them to put the partner banking relationships together, were very concerned. They said, if we start effectively shepherding customers into a post office, won't you just migrate them all on to a post office account? All of the banks got comfortable over the period of time that we were putting the partnership together. We were all faced with marketing and advertising every minute of every day. The likelihood of a customer coming into a post office wishing to withdraw some cash and at the same time going, I've never thought about a post office account before. I think I'll change. They all got comfortable with the fact that that is an unlikely thing to happen. It is not something that is front of someone's mind when they think that they need to get £50 out for the weekend or that they need to pay a certain bill or whatever. In fact, it's been borne out in fact since we've been serving the banks in the post offices, we've seen very little migration. We actually recuse ourselves, if that's the right word, we prevent ourselves from saying, I see you've got an RBS card. Have you ever thought about a post office account? We do not poach at the counter. We just fulfil the transaction that the customer wants. If, whilst they're in there, they see around them all of the advertising for pensions, for holiday insurance, for travel money, et cetera, and they think, oh, I'm away next week, I'll get some travel cash out, then, of course, they can take that service, but it's not a specific swap over the bank account. We don't try and force people to make that move. It's a personal choice. We serve them at the counter for the transaction that they want. In your earlier comments—I don't recall everything—you were talking about, I think, in response to Jackie Baillie's question about setting up as a bank, as your own bank, you were arguing that it would be difficult because it would be perceived as poaching customers? My apologies if that was the impression that maybe I can clarify. What I was really trying to say was, if we were to invest a significant sum of money to create a post bank, you would need to create the return in order to make that worthwhile. To create the return, you would need to have several million, if not many million, customers. We already serve them in every post office anyway, so how would we go about taking a large group of customers and move them from their existing bank in relationships across all the banks and move them on to a post office account? It becomes, in my own mind, financially challenging to have put that kind of investment in to create the post bank shell, and then where do you find the customers from? All you could do is take them from the group that we already serve. It becomes a self-defeating thing in the end. It's not something that we can make financially viable at this stage. It is constantly under review, and we will always be looking at new ways in which we can serve the communities best that we're in, but right now, I don't think that, with the banking regulations as they are, we could create a post bank that would be strong enough and sustainable enough without the support of many millions of customers using it. Okay, that's helped to clarify things. Thanks very much. Can you say something about your relationship with Government and its intentions and aspirations and the financial support that it provides? In general, to the post office or about banking in particular? In particular. Banking in particular. Okay, so we work very closely with our stakeholder as the post office, UK Government investments, UKGI, and we work very closely with them in how we encourage and raise awareness of banking services. So, working through UKGI and into Treasury, Treasury, EST issued the letter to post offices and to the banking communities to say, do more, you need to raise awareness, how are you going to do it? You can't just leave communities when the bank branch closes, you need to tell people about the alternatives. So, we work very closely with UKGI, with Treasury, with DWP, in servicing the POCA account, as I mentioned earlier. They're the three main departments that we work with. We've heard evidence from small businesses that they don't see the post office as a viable alternative to their local bank branch. From what you said this morning, it seems that you are. What work have you done with the small business community to demonstrate to them the kind of services that you can provide and how aware are they of that? It's a very good question, and I've read through the previous submissions, and I would possibly most charitably say that some of the contributions possibly have been looking back at things that were in the past and are not looking at how we've tried to change things. With the small business community in particular, I recognise that, in Scotland in particular, with Royal Bank of Scotland and Bank of Scotland as part of Lloyd's, it's only recently, in the last year or two, that we have been able to bring on board the small to medium enterprise sector for those banks to be served in post offices, so that's a new or an emerging area. Across the UK, we've been serving small customers for many years. Santander, for instance, their small business customers can't use a Santander branch, they can only use a post office, so we have got very— That's Santander's policy that they want to keep their branches for big businesses? It's certainly their policy. I think that it's maybe an IT-related issue. The systems in their branches came from a different generation and don't support the business community. However, we can. We support 100 per cent of Santander's small businesses and we support them exceptionally well. We handle over 30 million transactions a year for them. We have got very well-developed ways in which cash can be deposited into the post office, into their bank account. Increasingly, for those banks that recently joined us, RBS Bank of Scotland, we are doing exactly those kind of services. We are improving things for postmasters by being able to provide note counters, especially with polymer notes coming through. The chance of counterfeit is less, but still you have to count the cash. What we have asked the business community to do, and we are getting some great buy-in from them, is that we only support full coin bags, so that makes it easier. Postmasters are not counting lots of pennies and 2Ps and 5Ps, full bags only. Notes are counted, counterfeits are found. Postmasters will no longer be liable for fraudulent notes that come through the system. If they find them, using the facilities that we offer, they are no longer liable. We are trying to make things better for the postmasters to accept these services from businesses. I am just wondering what the barriers are. There are a number of issues that we have covered already, but what are the barriers for the post office providing more services or supporting credit unions and credit union customers accessing services through your branches? In terms of credit unions, we talked briefly before we joined you this morning. We have been working with some credit union aggregators. Those are companies that can take the different types of output from individual credit unions—mostly electronic. There is not a great deal that we can do for cash box and a notebook—some of the smallest credit unions that we probably cannot serve in post offices. However, any that have electronic systems that feed out information is working with some of those aggregators to be able to provide service in every post office across the country for access to those credit union accounts. As I mentioned earlier, they would typically be proper bank accounts, if you like, and they are transactional accounts. That is a service that we are looking to deliver over the next few months. It is really trying to offer a wider branch network to credit unions that otherwise do not have any. That would not be limited to say that, for example, it would only be your branches in Glasgow that would offer services for the Glasgow credit unions. It would be that you could access them completely nationwide. We very much welcome that. It is an exciting opportunity. We look forward to working with the post office to encourage that. You have heard of barriers. The only barrier would be that all credit unions are not a chain. They are all in different systems, and they all have their own priorities and resources. The neat solution would be that you could access all credit union services with an all-post office branch. It is difficult to get to that point, but we welcome the direction of travel on that. Credit unions will have to work more closely together or perhaps maybe stand as I some of the services to allow that wider access in the future, or just as a model going forward. I think that if we are going to overcome some of the challenges that I mentioned about technology and that sort of thing, I think that there is an evisibility that we will need to work together to achieve that. It is not always easily done, particularly if some of them are competing with each other for the same customers. I agree that it is probably something that we would like to see more of. Can I ask you along the same lines a little bit from both the credit unions and the post office what the particular challenges are for delivering services or attracting customers in rural areas or remote areas such as Highlands and Islands and other parts of Scotland? The challenge that we face is one of supply chain. It is making sure that all those communities have the same access to cash as we would offer to the rest of the country. Even some of the services that you mentioned are on additional services. Around those basic cash services, we also offer check handling, coin change, and we are constantly working with people at the FSB to work on new services that would be valuable in that transactional spirit for small businesses. For checks, for instance, in the Highlands and Islands it can take an extra day or two to get the checks physically into the system so that we can get them to the bank and get them processed. Again, I read one of the submissions talking about how post office loses checks. I would like to defend and challenge that. We handle many millions of checks every year, and that is growing very rapidly now, as places to deposit them become less and less. We are seeing about a 50-60 per cent growth in check handling each year. There are occasions when, for some of the smaller or less mainstream banks, we still accept checks in and, literally, what happens at the central distribution centre, which is an industry centre called IPSL, will be literally posted out to the bank. In some cases, maybe those go adrift, but they are one in several hundred thousand, if not one in a million. We offer a very secure service for physically handling cash and checks. The challenge that we have is to get it out there. In some cases, in the furthest aisles, it is by boat. You can imagine that the physical nature of those services means that it takes time. The issues that I am from, and we have a small post office in the area where I live, one of the issues is opening hours. The opening hours are very limited and we wouldn't suit businesses. Is that something in the future that you think you may look to revise, whether longer opening hours can be made available to business-friendly, more consumer-friendly? We are looking at a number of areas exactly that. If I refer back to an early answer, about four thousand of our branches handle the vast majority of business deposits. Specifically, we are open as a network about four hundred thousand hours a week more than we were several years ago. There are four thousand branches open on weekends, on Sundays, we open late into the evening, so businesses that would otherwise have to shut, let's say, on a Thursday afternoon, drive to the nearest town to go and do their banking, that loses them five per cent of their week. We all know that the high street is under pressure, that five per cent trade may well be their profit for the week gone. If we stay open longer so that someone can bank on their way home or they can bank at weekends, we are offering a lifeline to those local businesses. As we look to the future, what we look to do in the broadest part of the network is potentially to automate. That means a box with a post office rotating on the top of it. Some sort of automated device into which cash deposits can be made. There is not just an ATM for cash withdrawals, but the ability to offer services 24x7 in secure locations. I will come back in for this right to the credit unions just a second, but I do want to push on this. Obviously, the changes that are going to require new customers joining, as a slightly topical thing at the moment about IT resilience, would you see that you are having to improve your systems to meet demand like that? A hostage to fortune, as you say, we have clearly seen the challenges in the last week. In particular, over the weekend, we were on standby with cash delivery ready to go if those particular problems carried on and there was a demand for cash across the country. I think that it was a salient point to us all that we are not yet a cashless economy, and we should not become a cashless economy. Cash will be king for a number of years to come. Even in eight or nine years' time, it will still be 30 per cent of the transactions in the country will be cash-based. On standby, was that just on your own actions or was that within consultation with the banks? That was just on our own actions. That was just thinking, actually, if this carries on and people can't buy fuel and they can't buy food, how do we keep the ATMs going? How do we open the branches longer? How do we supply them with cash? So we will offer our own back just to try and keep that going. Your point about the IT system is very relevant. None of us running large national infrastructures can say with certainty that there's never going to be a problem. All we can do is plan for the worst cases that do happen, have contingency built in place, disaster recovery and business continuity plans and we have those very well advanced, very well developed in terms of what do we do if our system cannot operate. Can I just ask a quick last question as well? Bearing in mind what Jackie Baillie and Gordon MacDonald mentioned about potential branch closes, the Highlands Islands has seen a number of post-offices closed. I imagine that you'll have projections in terms of what the numbers of post-offices are looking to the future. Can you tell us whether that will be increased or decreased the same? Our plan is at present as an increase. We just to give you some further detail and thank you to my colleague for helping with the detail. There are actually 133 post-offices still to be modernised across Scotland. We've modernised 774. There are 21 directly managed branches in Scotland and of the remainder, 485, we support with a community fund. That community fund is in excess of £10 million. That's where we... There are two separate funds in fact. One is that we pay to keep what might be the Highlands and Islands post-offices open and it's almost the last phone box type model still. There are certain branches that will never make a profit but they are absolutely fundamental to the community that they serve so we pay to keep those open. We support them with circa £10 million community fund which is to help organise retail businesses in support of the post office. If you're running a convenience store we will help you with displays, we'll help you with how you set out the floor space in your premises. That's what that community fund is for so that's to absolutely make sure that we keep those community businesses going. Thanks very much. Can I just very quickly ask Karen how some of the particular issues facing people in the Highlands and Islands, obviously you talked, I think we spoke earlier about, maybe Catherine talked about 15 miles round trips. I mean that's a fairly standard, possibly short trip in some parts of the Highlands and Islands, just a doddle million for many of us. Can you tell us about some of the issues that people may face in the Highlands and Islands and the credit unions may face in terms of setting up? Yeah, I mean to be honest I'm not sure it's something I've got a very good answer on. The Highlands and Islands are sort of the biggest credit unions, they're high scottish credit union. They seem to be seeing good growth, they're a strong credit union although if I'm being honest I'm not sure that they're really providing the sort of cash service and the services that people will be looking for if their banks are closing, so I'm not sure I've got a sort of good response on that one. I'm not as rural as that but we have areas that are out with our common bond and the credit unions are trying to adapt. People can email, telephone, we pay by backs. As long as checks are payable to the credit union that can post checks in, from the new money laundering credit unions can't accept checks now made payable to the member, so that has caused quite a lot of problems in the community because children get checks from grandparents, things that we can no longer process these checks, but if the check is payable to the credit union they can post it in and it'll pay credit into their account. We try to pay cash the next day if we receive an email or a text and I imagine every credit union is using the same technology just now. We're all trying to upgrade to have more apps and more IT that appears to the younger generation. We're trying to do that at the Vale of Leven just now but it costs a lot of money. It comes down to finances, trying to give rural people the best service. Right now it's a telephone call, I need my money in my bank or an email but we accept that and that's how most credit unions are still dealing with the rural areas as best as we can in the circumstances. We've been asking most panels a similar question just to see what different responses we get from the various stakeholders in this whole bank branch closures inquiry. What in your opinion do you think the Scottish and UK Governments, if anything, could do to ameliorate the negative impact of the bank branch closures? From your perspective, if it's helping you to occupy that space, if that's what you want to do in any way, I'll throw it open to you all. We've outgrown our office. I have a credit union in Alexandria, just beside Balloch. We've outgrown our office. We have £4 million in savings. We have 4,000 active members, 1,000 junior savers. We have just over £3 million out in lending but we are compact in our premises. So we heard the Royal Bank was leaving the high street. We approached the Royal Bank, we approached the council, we approached the agent acting on behalf of the Royal Bank. We got absolutely nowhere till the Royal Bank moved out and left the place like a bomb site. Bear wires, electronic doors, all disconnected. Estimated but 100,000 to make it usable. So it will lie empty in our community because it's not suitable for retail. It has three tiny windows. That will be an empty building in our community till whenever. There is no joined up between the agencies, between the banks, the councils. Nobody seems to know what anyone else is doing to give help to any other company that could use these buildings. The bank just rips them out and goes. You also have the ATM, they've left the ATM but whoever takes the building must keep the ATM. That can be a restriction sometimes as well because if the credit union or anybody else moves into it they have to build in a secure area for the ATM. That should be something done in the way of the UK Government when banks vacate a building. There are certain restrictions that put on what they can and can't do with that building or do you think that that's going too far? I don't think that they should just be allowed to strip it there and leave it like an ugly parasite on the town centre. It just looks over. It will be looked at for long enough because the rents and the rates on it will be prohibitive to anyone else taking it over. The council's not making an income out of it, it's lying empty. We would have moved into it if they'd left it in a half reasonable state. Somebody should be looking to see what's going on. It's a council in building so somebody should have been watching to see what was happening when they moved out. Is anybody else getting any thoughts on what the either government or local authorities could be doing? Just picking up on that particular point and thinking about Mr McDonald's constituency and Juniper Green, that RBS building has closed. I know that Professor Beaver's gave evidence to the committee last week. I know that he's been trying to speak to RBS about taking over that building in some way to use it as a community hub. We've been thinking about how we could fit in with that, but I know that they've got absolutely nowhere with that. My suspicion is that eventually it will be demolished and some flats will be built if they get planning permission. In general, I think that I've noted a few things on that. Legislations could be passed, which means—I'm not suggesting a full public inquiry on every bank branch closure—that the banks have to consult with the local community before they close the branch, so they have to talk to them. The banking standard makes it not voluntary and also includes a consultation. I know that RBS will talk to the local community on a voluntary basis, for example, but it should perhaps be laid down in legislation that they have to consult. As I said, I'm not suggesting a full-blown public inquiry on every bank's closure, but I think that that would be important. The second thing that I've noted down here is that the banks maybe should be required to provide funding in the communities where they close branches to open up a community bank or a credit union to somehow provide some—the credit union community bank isn't going to replace the services that the retail bank is offering, but it should provide somewhere for small businesses to deposit cash, for example. That's another example of what I'm talking about. I'm just picking up on what Kathy said about the obliged to keep the ATM. I think that that's a really important point, which I think that I mentioned earlier. It's that when the branch goes, the ATM goes, and perhaps the retail banks should be obliged if they are going to close the branch, they have to maintain an ATM in either that branch or in an adjacent building, and be responsible for maintaining it, filling it and giving people access to cash in that community. Those are the things that I noted down about that particular question. I would reiterate some of what I've touched on already. We see it as a journey, but we hope that both Governments will continue to support the credit union sector to grow and to become stronger and, hopefully, to play a bigger role. As I said earlier, in terms of the UK Government, I think that the main things that they could do is look at reform in the credit unions act to help us to be a bit more relevant to our members and to consider some of the capital requirements. Reform should like to see? At the moment, the credit unions act basically sets out that credit unions can do savings and not much else. They can offer some additional services around that, so they can offer insurance on your loans and your savings. We would like to be in a position where we could provide a more holistic financial service to our members. For example, we can offer credit cards or insurance, or maybe contents insurance and that sort of thing. When we look at other countries where the credit union sector is much better developed, personal lending is a tiny percentage of what they do, whereas in this country it is almost all they do. We think that there is real potential for the sector to grow if we could get that reform in place. As I said earlier, we think that the new introduced capital requirements for larger credit unions are restrictive and it is making it difficult for them to grow. In terms of the Scottish Government, I guess that the main issue would be that of visibility. They have been very supportive—I mentioned the campaign that they are going to launch later this year, but they will continue to help us to get in particular to workplaces and that sort of thing, to serve people who maybe would not think of joining a credit union, but will probably find it in their benefit. I think that there is also potential for some investment in the sector, if they were working to do that. We place a great deal of importance on being sustainable, but in things that are difficult for us to raise funds in, so I mentioned capital, technology and that sort of thing. The FCA is amenable to the services that a credit union offers being extended. I think that it will say that you can do what you want, but it will say that you can extend the services and you can offer other products, for example, capital offering. There is a bit of a debate going on right now as to whether it needs reform or whether it is within its ability to sort of interpret the act in a way that we would like. I think that we would like them to be a bit wiser in their interpretation. Ultimately, we feel that perhaps it would end up having to be the reform of the act that would make a final decision on that. I am from Jolly Martin's line of questioning around processes that could be put into place if there is to be a bank closure in a community. At the very least, if it is the last bank in town, if it is so often coined, there should be something put in place that the bank has a duty to look at building that site for some form of community use, if it is viable. We are picking up on that often. I believe that these bank branches are owned by the bank, the site is owned by the bank and I am sure that in the majority of cases the bank will be looking to sell the land for housing. I am sure that that is what is happening in most cases. However, I agree that there should be some responsibility on them to consult with the local community. If they are the last bank in town, something should be done with that building that does not involve the bank making even more money out of the branch being closed. It is some sort of legal definition around the last bank in town, because my understanding is that it is only a concept that has been used. What that could lead to is a rush to get out of the town so that you are not the last bank in town. We would not want to make the responsibilities of the last bank in town too draconian, because otherwise, as I say, there would be a rush to not be the last one. I think that I could just absolutely confirm your point, Gordon. We have seen exactly that, that a couple of banks over the past few years have said, we will not leave. You can rely on us. Unfortunately, with the rush to exit, and they have discovered that they are the last bank in town, they have then subsequently changed their mind, because the way that the public is using banking is just for cash in some of those areas. We have all seen someone with a clipboard desperate to talk to you as you walk into the branch, head straight to the cash point, take some money and walk out again, and they cannot do anything with their clipboard. They cannot talk to us. We are just in for one task only. I think that that has accelerated exactly as you say. We do not want to be here any more. We said that we would be the last, but we cannot be, so we are going as well. In terms of some sort of community role for the buildings, not related to financial services, absolutely there could be something that says that you must do something for the local community, especially under pressure high streets. In terms of financial services, that community hub that I would propose is best served by a post office. We are there. As I said, within 100 yards of 45 of the closing RBS branches, there is a post office. Any of the other panellists? If not, thank you very much for coming in today, and I will now suspend the meeting and move to private session.