Cat Smith Column: How we can bank on our communities

Fleetwoods branch of RBS, which has closed, to be swiftly followed by the ports branch of Santander
Fleetwoods branch of RBS, which has closed, to be swiftly followed by the ports branch of Santander

This week, Fleetwood MP Cat Smith looks at ways to help local people get access to financial services, after banks closed their doors in the port.

This week I’ve been in touch with the leader of Preston City Council about opening a community bank in Fleetwood.

I was bitterly disappointed by the announced closure of the Fleetwood branch of Santander, which came just weeks after the closure of the RBS. The closure of another bank means job losses and damage to our communities, high streets and businesses that rely on banking facilities.

Preston City Council has come up with some bold and radical plans, however, that may provide a solution to the banking crisis in our town. The city council’s budget proposes setting aside £1million to invest in a community bank.

Working with councils across the north west, Preston believes that it can set up a bank to lend money to local people and create jobs within the county.

As part of the project, there are plans to open dozens of branches on high streets across the region, so I’ve been in touch with the leader Matthew Brown to see if we can open one in Fleetwood. I’ve had a positive response and will now be taking these discussions further.

To create the bank and achieve a full banking licence would require three million people from Lancashire, Cumbria and Merseyside to join.

Even though we do not yet have them in the UK, regional community banks are commonplace in many countries and bring huge benefits to local people. They generally perform better in regards to financial inclusion, meaning everyone is able to get a full current account regardless of their income or credit status. The banks are often more committed to keeping branches open, even in more remote areas. They are also more committed to lending to smaller companies. Half of the assets of the big four banks include investing into other banks, hedge funds and other financial institutions and not enough is devoted to supporting the real economy, so sectors such as manufacturing, retail and distribution have suffered as a result. Regional banks, by their nature, reinvest existing money that is already in the region back into the local economy. For example, small and medium sized enterprises deposit far more into banks than they get out in loans. In Lancashire this amounts to billions of pounds that businesses are depositing into banks but less than 60 per cent of that will be coming back into the county. The rest is lost to London. That is money that should be reinvested back into our local economy.

I’m really excited about this proposal and I‘ll keep you updated on progress.

I’ve also been in discussion with Clevr Money, the credit union which operates across Blackpool, Fylde and Wyre. Credit Unions have grown to provide loans and savings to more than 1.2 million people across England, Scotland and Wales. Across the world 217 million people are credit union members in 105 different countries.

A credit union is a not-for-profit financial co-operative which provides a range of services and is owned and controlled by the members. The emphasis is always on providing the best service to members – not maximising profits. Credit unions offer loan products suited to your individual needs and at rates you can afford.

Because credit unions are focused on serving their members rather than maximising profits, credit unions are often able to offer smaller, shorter term loans that many banks refuse to offer – and for which other specialist lenders charge high interest rates. Clever Money Credit Union say they’ll increase their presence in Fleetwood, and I’ll provide more details shortly.