New FCA proposals will protect access to cash... as usage of coins and notes rises for the first time in a decade

The Financial Conduct Authority is proposing new rules to protect access to cash in Britain.

Under the proposals, designated banks and building societies will have to assess gaps in access to cash.

These assessments will take into account local factors such as demographics and transport.

Where banks and building societies identify gaps in access to cash, they will have to address them.

new fca proposals will protect access to cash... as usage of coins and notes rises for the first time in a decade

New rules from the FCA will see banks and building societies assessing gaps in communities’ access to cash

It comes as a report from the British Retail Consortium today reveals cash usage grew for the first time in a decade, rising to 19 per cent of all transactions, from 15 per cent in 2021.

High streets up and down the country have been beset by bank branch closures – and with it, free-to-use cash machines.

Data collated by cash machine network Link indicates that, since May last year, 1,259 branches have shut — or are due to close between now and late next year.

Most of these would have had at least one hole in the wall.

Now, under the FCA’s new proposed rules, when changes are being made to cash access services, designated banks and building societies will be required to undertake cash access assessments – to understand whether additional services are required to meet local gaps.

They will also have to respond to requests from local residents, community organisations and representatives to assess and plug any gaps in accessing cash.

Where the assessments show there is a significant local gap or that there could be in the future, banks and building societies will be required to deliver additional cash services to fill gaps.

Banks and building societies will need to ensure they do not close cash facilities, including bank branches, until any additional cash services identified are available.

The FCA’s new powers don’t prevent bank branches from closing, but the rules will come into effect where branches are a key local source of cash.

The current law allows retailers to decide whether to accept cash or not – so the FCA cannot force them to do this.

The FCA expects to finalise the rules by summer 2024.

Sheldon Mills, of the FCA, said: ‘We know that, while there is an increasing shift to digital payments, over 3million still rely on cash – particularly people who may be vulnerable – as well as many small businesses.

‘It’s important that we support consumers impacted by recent innovations.

‘These proposals set out how banks and building societies will need to assess and plug gaps in local cash provision.

‘This will help manage the pace of change and ensure that people can continue to access cash if they need it.’

The FCA says that as of the first three months of 2023, 95.1 per cent of the UK population are within one mile of a free to use cash withdrawal point, such as cash machines or Post Office branches.

” Face-to-face and ATM cash services are still vitally important for millions of individuals and small businesses across the UK and will be for many years to come.” Natalie Ceeney – Cash Access UK 

While 99.7 per cent of the UK population are within three miles.

John Howells, chief executive of cash machine network LINK says: ‘This is a good job by the FCA with real teeth.

‘This is a very detailed and comprehensive set of rules that puts LINK’s work on a statutory basis.

‘As part of the consultation, the FCA says that any location that is set to lose its final branch must have facilities in place before that branch shuts.

‘This will strengthen provision for small businesses and LINK will need to look again at locations where the community is supported by retail only banks such as Nationwide.’

Natalie Ceeney, Chair of Cash Access UK says: ‘Not everyone is ready or able to use digital services.

‘Face-to-face and ATM cash services are still vitally important for millions of individuals and small businesses across the UK and will be for many years to come.

‘The FCA’s consultation is very welcome, and we look forward to working with the FCA on putting the right framework in place.’

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