Banks forced to protect local access to cash
Banks and building societies will be forced to ensure that cash can be withdrawn and deposited in local communities.
The financial regulator will be granted new powers to halt the steady erosion of cash machines as banks increasingly move to digital operations.
The government will in due course set out its expectations for a reasonable distance for people to travel when depositing and withdrawing cash. This will reflect the existing spread of cash withdrawal and deposit facilities in the UK.
Cash is the second most frequently used method of payment in the UK, and around 5.4 million adults rely on cash to a very great or great extent in their daily lives.
However, since 2018, the number of free-to-use automatic telling machines (ATMs) has dropped by more than 12,000 – a reduction of almost a quarter.
The new powers for the Financial Conduct Authority (FCA) comes as Lloyds Banking Group has announced the closure of a further 20 branches and Halifax eight. Lloyds has no branches in Scotland where it operates through the Bank of Scotland. None of the Halifax closures is in Scotland.
Economic Secretary John Glen, who will be visiting Scotland on Thursday, said: “Millions of people across the UK still rely on cash, particularly those in vulnerable groups, and today we are delivering on our promise to ensure that access to cash is protected in communities across the country.
“I want to make sure that people are still able to use cash as part of their daily lives, and it’s crucial to ensure that no person nor community across the UK is left behind as we embrace a more digital world.”
The Chancellor set out in his Mansion House Speech in 2021 that the UK must remain at the forefront of innovation and technology, and the government recognises the need to embrace the transition to a more digital world and realise the opportunities this brings individuals and businesses.
But as we transition to a digital payments system, it is critical to acknowledge that cash access remains vital to millions of people in communities across the UK, particularly those in vulnerable groups, and no one should be left behind.
The government passed legislation to enable the widespread adoption of cashback without a purchase as part of the Financial Services Act 2021, which was possible as a result of the UK’s departure from the European Union.
And last month the government announced its intention to legislate to provide the Bank of England with the powers necessary to ensure the UK’s wholesale cash infrastructure remains effective, resilient, and sustainable, and continues to support access to cash across the UK. Taken together, the Treasury says theser measures will ensure that the UK’s cash infrastructure is viable for the long term.
The new powers will be legislated for in the upcoming Financial Services and Markets Bill.