Banks closing branches will have to protect customers’ access to cash – watchdog
The Financial Conduct Authority said new rules will come into effect from September 18.
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Banks and building societies shutting branches will need to do more to make sure people can still access cash, under new rules being introduced by the UK’s financial watchdog.
The Financial Conduct Authority (FCA) said its plans will come into effect from September 18.
The new powers will not prevent the closure of bank branches.
Instead, it will require banks to make sure they are plugging significant gaps in local cash access.
That’s why we’ve acted quickly in response to new powers given to us by Parliament to ensure reasonable access to cash withdrawal and deposits is maintained
The move comes as Britain’s high street lenders have shut thousands of branches across the UK in recent years, leaving many towns without any local branches.
Consumer group Which? said in May that more than 6,000 bank branches had closed since 2015.
Major banks say that there are fewer customers who are using in-person services, with more people preferring to use mobile and online banking.
But the FCA said its research found that three million people on average still rely on cash, with lower-income households disproportionately likely to be excluded from digital services and more reliant on cash.
“And many small businesses still need somewhere to safely deposit their takings each day,” said Sheldon Mills, the FCA’s executive director of consumers and competition.
“That’s why we’ve acted quickly in response to new powers given to us by Parliament to ensure reasonable access to cash withdrawal and deposits is maintained.”
The FCA said its new rules will require banks and building societies to fill gaps in cash access with measures such as banking hubs, ATMs and Post Office facilities.
Banking hubs allow staff from several banks to share the same space, helping to fill gaps left in the system from branch closures.
They have a counter service operated by the Post Office, allowing customers to conduct routine banking transactions like withdrawing and depositing cash and paying in cheques.
Banks will also need to assess the needs of local communities and make sure they are responding to residents and groups that raise concerns.
The rules go further than the current, industry-run, voluntary scheme.
Meanwhile, prior to winning the General Election, Labour pledged to open 350 banking hubs in towns and villages across Britain over the next five years.
Much has been achieved over the past couple of years, especially with the rollout of banking hubs and deposit services, but crucially this makes a voluntary arrangement law
Adrian Roberts, the deputy chief executive of ATM network and cash access scheme Link said: “Today’s regulation is good news for consumers.
“Much has been achieved over the past couple of years, especially with the rollout of banking hubs and deposit services, but crucially this makes a voluntary arrangement law.
“To date, we have recommended almost 150 banking hubs and 129 deposit services with Cash Access UK and Post Office opening new cash services on the high street every week.”
Alice Haine, a personal finance analyst for Bestinvest by Evelyn Partners, said the new plan was a “landmark move” by the FCA.
She added: “Access to cash and the ability to use notes and coins in consumer transactions has become a particular challenge for the elderly, the less digitally capable, the unbanked and those on low incomes, who rely on cash to manage their finances.”
She said the rules will mean banks must “listen to the concerns from local communities” and offer additional cash services or keep facilities open for longer until alternative options become available.
Tulip Siddiq, the economic secretary to the Treasury, said: “Cash continues to play a vital role in the lives of millions of people and businesses across the country, so I welcome the FCA’s new rules.
“Our commitment to roll out 350 banking hubs will also help provide local communities with access to the critical banking services people rely on.”