1. What progress has been made to establish a community bank in Wales? OAQ54778

I thank the Member for that question, Llywydd. The partnership created between Banc Cambria and the Community Savings Bank Association is completing a detailed project plan, an initial market assessment and feasibility study, with the help of both the Development Bank of Wales and Cardiff University. I look forward to early receipt of that report. 

Well, I note the cross-party group today, which I couldn't attend, referred to that and the development of the group working in Banc Cambria to take forward your proposals for a community bank. Of course, these run in parallel to the development of the Post Office banking framework agreement with 28 UK banks to enable customers on the high street to access wider banking services, and the proposals two years ago from Responsible Finance Wales, for others, for groups, to work together to develop a community bank model. And, of course, I used to work in one of the forebears of the community banks—one of the mutual building societies. 

However, when I raised with the First Minister at that time, in 2010, the risk management and capital adequacy requirements and regulation a new bank would have to comply with, which an established bank partner would not, the then First Minister agreed that setting up a new bank can be, quote,

'a costly and protracted business if you start from scratch, and using the expertise that is already in the sector to develop a social model of banking makes sense'.

What discussion have you and your colleagues therefore had, in consultation with consumer groups and industry experts, regarding the feasibility of a community bank in Wales reflecting those core banking needs, regulations and principles? 

Well, Llywydd, I thank Mark Isherwood for that question. He is quite right to say that the business of setting up a new bank has significant regulatory hurdles to overcome and that it can be a protracted business. But that is why we are working with the Community Savings Bank Association. And in that way, the landscape has changed since 2010, because the Community Savings Bank Association, coming out of work carried out by the Royal Society of Arts, has financed itself and led preparation of constitutional documents, IT systems, branch designs, payment system links, product specifications, and, critically, banking licence application documents. So, there is now a great deal more work that has been done by a group of experts that gives us the foundation for what Banc Cambria can do here in Wales. 

The banking licence application document, particularly, breaks the process of obtaining a licence into a number of manageable phases. And that's the way that we intend to work through the process in Wales, taking it a step at a time. That's why the initial market assessment and feasibility study is so important, because it will test those basic questions of viability and sustainability, and then we will move to the next stage, working with 11 other initiatives that are at various stages of progress across the United Kingdom, each one of them under the umbrella of the Community Savings Bank Association, giving us the confidence here in Wales that we have the advice we need to make a success of our ambition to establish a community bank. 

I’m sure it would be easier if we had our own regulatory rules in order to establish such a bank, but we as a party have supported having a community bank for many years, and I look forward to having an account in our community bank here in Wales. And, of course, this is a response now to the fact that high-street banks have left our communities in the numbers that we have seen over the past few years. Would you agree with me that the fact that we have failed to regulate and failed to put conditions on those banks has left us in this position where we have seen that exodus of financial services from our high streets in the way that we have seen over the past few years?

Well, to be honest, Llywydd, it’s far more complicated than to just say that it’s regulatory issues that lie behind what’s happened on the high street. What the banks say is that the business model that they’ve used over the years just doesn’t work as it used to many years ago. The numbers of people using their branches have fallen, very many more people do their banking online, and so there is something about the business model, too. And that’s why it’s been so important to work with the Community Savings Bank Association, because they’ve created a new model where they are confident that it’s possible to run something on the high street in a different way and which can work locally. That is why we’ve made progress on that. I do agree with what Rhun ap Iorwerth was saying about the problem, and the problem exists throughout the whole of Wales, as we know. But just saying that the old ways of doing things are the best ways is too simplistic and will not work. And that’s why we have the new model, and we’re working hard to get that model up and running here in Wales.