Banks should be subject to a legal duty to always act in customers’ best interests, an influential group of MPs has proposed.

The Treasury Committee piled pressure on regulators to clamp down on lenders after a long-running string of scandals that has seen banks pay out more than £30bn to compensate consumers for missold endowment mortgages, PPI and pensions.

Banks should also not be allowed to ignore communities when choosing to close branches or cash machines, the committee said.

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Some vulnerable consumers, particularly those that are older, have a disability, are less well off or lack tech skills, find themselves effectively excluded from access to financial services, the committee found.

Directing people to use the Post Office when bank branches close is not good enough, the committee’s report said.

David Clarke, head of policy at Positive Money, said banks enjoy billions in public subsidies but have “repaid the favour by neglecting communities, closing branches and cutting our free cash-machine network”.

“Today’s report should be a final warning for the banks taking Britain for a ride. Proposals to give financial firms a legal duty of care and to preserve bank branches and free ATMs are welcome, but only a start.”

The wide-ranging report makes a number of recommendations to preserve and improve access to banking services.

For example, where a branch is the last bank in an area to close, money should be provided for “banking hubs” in a local Post Office that will contain trained staff.

Banks should also do more to tackle “loyalty penalties” where customers get a worse deal because they have stuck with the same provider. Details of the size of the penalty, which Citizens Advice says can be almost £1,000 per year, could be published, the committee said.

Treasury Committee chair Nicky Morgan said: “The financial inclusion of vulnerable consumers – and we can all be vulnerable at some point in our lives – should be of the utmost priority for financial services providers, the government and financial regulators.

“It can no longer be an option for banks to ignore financial inclusion.

“A patchwork of improvements and adjustments have been targeted at some groups of consumers, but the basic level of access is still not universal.

“There are significant areas of concern where vulnerable consumers are effectively excluded from participating with financial services providers.”

If regulators cannot ensure that banks are always acting in their customers’ best interests then the committee said it would support the introduction of a legal duty of care.

Banks are currently relying on a government subsidy by pointing customers towards the Post Office to provide banking services, the committee said.

The Post Office is publicly owned and run at a loss. The committee said the Post Office must receive adequate funding from banks for the services it provides on their behalf.

The Post Office is not an “optimum environment for customers”, particularly vulnerable ones and should be thought of as comparable to an ATM, not a bank branch.

Financial Conduct Authority (FCA) figures show 1.3 million adults have no current account and no alternative e-money account.

Meanwhile, 3.1 million adults have high-cost loans. Nearly six in 10 UK adults have no cash savings or savings of less than £5,000.

Gillian Guy, chief executive of Citizens Advice, said: “It’s astounding that banks are not currently required to act in their customers’ best interests or pay attention to their specific circumstances.

“When they spot warning signs of financial difficulty, banks should provide support and set up a phone or face-to-face debt advice session.”

Stephen Jones, chief executive of UK Finance, said: “The industry takes its societal responsibilities extremely seriously and is committed to looking after every customer, including those in vulnerable circumstances.

“The industry’s commitment to financial inclusion is best illustrated by the basic bank account which offers free, if in credit, banking to nearly 7.5 million customers and is designed specifically to ensure that the widest range of citizens can have free, safe access to the banking system, including the disadvantaged.”

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