The campaign for Harpenden to receive a new banking hub could be set to fail after it was recommended that the town receive a deposit-only service instead.

Harpenden Town Council and Bim Afolami, the town's MP, have been calling for a banking hub, with Harpenden's last banks set to close later this year.

But the presence of a Nationwide building society branch - which does not provide business current accounts - in the town means that LINK, the organisation responsible for recommending whether towns should receive banking hubs, has said Harpenden needs a deposit-only service rather than a full banking hub.

Campaigner Derek French, a former director of the Campaign for Community Banking Services, says that 40 towns have been promised deposit-only services, but none yet exist.

He adds: "Even if one were to be set up, it would simply be a machine in a public space - such as a library - that could be used by businesses for depositing cash.

"It wouldn't enable people to access all the other services they may expect from a bank branch."

Unlike deposit-only services, banking hubs enable people and businesses to access a wide range of services from all the major banks.

This includes daily counter access for transactions, and administrative issues such as providing proof of ID, going through bereavement procedures, and registering powers of attorney.

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Each bank has a representative at the hub on at least one day per week.

There are currently six banking hubs across the UK, which Mr French says are proving to be "very popular".

He says that "more than 200" are needed in larger towns across the country, with only 60 currently agreed.

Bim Afolami said: "I have long been campaigning for a banking hub to protect in-person banking services on Harpenden High Street and Barclays’ announcement only increases the urgency of that campaign.

"I have spoken to senior figures at LINK to make clear my view that the deposit service – while better than nothing – does not address the needs of Harpenden residents, who will be left without a full service bank branch on the High Street.

“Last week I wrote to the Financial Conduct Authority to make this position clear.

"They will soon get the power to enforce shared banking hubs like the one we need in Harpenden through the Financial Services and Markets Bill and Harpenden should be the first town that they look at with those new powers.

"I’ll continue to explore every avenue available to ensure that we get the banking services we need."

The Financial Services and Markets Bill will give the FCA responsibility for ensuring "reasonable provision of cash access services".

But Mr French is sceptical that this means it will enforce full banking hubs in towns left without individual branches. He argues that the wording could be interpreted as meaning that a deposit- and withdrawal-only service has to be provided, rather than a full hub.

A spokesperson for Harpenden Town Council said: "Harpenden Town Council has been building the case for a banking hub in Harpenden for some time.

"We are currently discussing the next steps that we need to take locally, in light of the Barclays announcement."

They will provide an update on Monday, June 19.