NALC presses HM Treasury for better banking access for parish and town councils

We have called for better access to in-person banking services and greater recognition of the unique needs of parish and town councils in our response to the independent review into access to banking services.

The review, commissioned by the HM Treasury, is gathering evidence on the impact of changes to face-to-face banking and will inform recommendations on the future of banking services across the UK. In our submission, we highlight the growing operational and governance challenges faced by parish and town councils as bank branches continue to close and services move online.

We argue that many banks still do not fully understand the governance structures and statutory requirements of parish and town councils. As a result, routine processes such as opening accounts and changing bank mandates are often unnecessarily complex, time-consuming and resource-intensive.

Drawing on the findings of our recent banking survey, we warned that almost one in five parish and town councils (21%) believe that any further decline in access to in-person banking could leave them unable to fulfil their statutory financial duties under the Local Government Act 1972, turning what might appear to be a customer service issue into a significant governance risk.

The response highlights the particular impact on rural communities, where around 70% of parish and town councils are based. While alternatives such as banking hubs, Post Office services and postal banking have helped to mitigate the effects of widespread branch closures, NALC argues that these options do not fully replace access to traditional branch banking for many council functions.

We identify processing changes to bank mandates and paying cheques directly into parish and town council accounts as the two most essential in-person banking services. Councils experience frequent changes to bank mandates because banking authorisations are linked to elected councillors, whose roles change regularly following elections and annual meetings. Banks must also accommodate the dual-authorisation arrangements that form a fundamental part of local authority financial governance.

We also highlight several parish and town council banking activities for which digital alternatives remain inadequate, including cash deposits, obtaining change for community events and venues, amending bank mandates, opening accounts, cash collection services and managing petty cash. In our survey, 44% of respondents said digital banking could not fully meet their needs.

Our evidence shows that the greatest benefits of in-person banking include quicker resolution of issues through face-to-face contact with knowledgeable staff, faster processing of account changes and easier access to specialist support. Parish and town councils also reported that branch banking remains essential for services that are either unavailable or difficult to access through digital channels.

Our response identifies several risks if face-to-face banking continues to decline, including reduced ability to manage parish and town council finances efficiently, longer delays in changing mandates and opening accounts, greater reliance on online systems that are not designed for local authority governance, and an increased risk that councils may struggle to meet their statutory financial responsibilities.

To help support the sector, we recently launched a Banking Hub, providing parish and town councils with practical guidance and resources to navigate banking challenges. However, we stress that digital tools should complement, not replace, in-person banking services where councils have operational, governance or legal requirements that cannot be met remotely.

Our response concludes that maintaining accessible, proportionate and well-informed banking services is essential to ensuring parish and town councils can continue to manage public funds effectively and deliver for their communities.