Banks will be fined if they fail to provide consumers and businesses with adequate access to cash deposits and withdrawals, the government has confirmed.
Economic secretary to the Treasury, Andrew Griffith, set out a new minimum expectation for cash-users in a statement on Friday (August 18), stating that free cash withdrawals and deposits must be available within one mile for people living in urban areas, or three miles in rural areas. In addition, if a service such as an ATM or bank branch is withdrawn and a replacement service is needed in the area, then this should be done before the closure takes place.
The Financial Conduct Authority (FCA) has been provided with new powers by the government to protecting cash access without any fees for those who hold personal current accounts, including the power to fine banks if they do not keep to the minimum standards of provision.
An average of more than 50 UK bank branches have closed each month since 2015, according to research, with a higher rate of closure in disadvantaged areas, while the proportion of digital payments has risen from 45% to 85% in the past 10 years.
However, cash remains a necessity for millions of people, with the elderly and those with disabilities among those who were most uncomfortable about digital banking.
The FCA is also required to “have regard” to local deficiencies in cash access, taking into account factors such as the opening hours and distance to cash access services, as well as the need for in-person assistance.
Bank hubs, which are spaces shared by several different High Street banks have been touted as a solution to help communities that have seen all their bank branches close. However, only seven permanent hubs have opened in the UK so far.
Griffith said: “Whilst the growing choice and convenience of digital payments is great, cash has an important and continuing role to play. That’s why we are taking action to protect access to cash in law and laying out that this means fee-free withdrawals and the availability of cash facilities within a reasonable distance.
“As it stands, the vast majority of people living in urban areas can access cash deposit and withdrawal services within one mile; with rural-dwellers around three miles away. Today’s policy statement makes clear that the FCA should use its powers to maintain this level of coverage, while recognising that needs may differ by location and change over time.
“It also makes clear that – if a service is withdrawn and a replacement service is needed – this should be put in place before the closure takes place. These are measures which benefit everyone who uses cash but particularly those living in rural areas, the elderly and those with disabilities.”
