New rules from the UK’s financial regulator to ensure access to cash have come into force which have handed new powers to local communities and placed stricter requirements on banks looking to close branches.
From today (Wednesday, 18 September) the Financial Conduct Authority’s (FCA) measures, confirmed in July, enable residents, organisations, businesses and charities to request an assessment checking for gaps in local cash access.
The FCA said charities or local groups would be able to share a collective view of community needs, including the most vulnerable residents and businesses which rely heavily on cash.
After a review is triggered, cash machine network Link would have 12 weeks to do an assessment on whether there are gaps in the ability to deposit and withdraw cash.
If it finds significant gaps, banks and building societies must deliver additional cash services to meet the local areas’ needs, which could include banking hubs, cash machines, deposit ATMs and Post Office facilities. Banking hubs are multi-brand outlets where several banks share facilities.
Meanwhile, banks and building societies must now assess whether closing bank branches or ATMs leaves local communities, shops and businesses without adequate access to cash before making those decisions.
Where significant gaps are found, firms will need to provide “reasonable additional cash services” and could face unlimited fines if they do not abide by the rules.
New cash powers awarded to the FCA
The FCA was granted beefed-up powers by the government to ensure reasonable cash access in the Financial Services and Markets Act 2023.
Its new rules come after thousands of bank branches have disappeared from high streets over the past decade as lenders look to cut operational costs and embrace the prevailing shift to online services.
Consumer group Which? said in May that banks had closed more than 6,000 branches since 2015.
Still, an FCA survey found more than six per cent of adults (3.1m) used cash to pay for everything or most items in the 12 months up to May 2022. The proportion was nine per cent among vulnerable consumers, including those digitally excluded, in poor health or on low incomes.
“The way we spend money is changing, and far fewer of us use cash day-to-day,” said Sheldon Mills, the FCA’s executive director for consumers and competition.
“We don’t want to stand in the way of change, but we do want to ensure reasonable access for those who continue to rely on cash. Our new rules are already having an impact, protecting vital services for communities across the country.”
Link said a further 15 new banking hubs have been confirmed as a result of the FCA’s rules, taking the total it has recommended to 163, with 81 already open.
Last week, the new Labour government agreed a deal with banks for around 230 hubs to be rolled out by the end of 2025 and a further 120 delivered by the end of the Parliament.