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New powers will be placed in the hands of local communities from Wednesday, enabling people and organisations to request an assessment checking for gaps in local cash access.
From September 18, such requests can potentially be made by a range of interested parties, including individuals, groups of people, organisations or local businesses.
Emad Aladhal, director of retail banking at the Financial Conduct Authority (FCA), told the PA news agency that the changes will support people who rely on cash, as well as local businesses.
He said: “This is about making sure that we retain an ability to deposit money and an ability to withdraw money in local communities.”
He said the FCA will make sure that designated banks and building societies, co-ordinated by ATM and cash access network Link, will follow through with the changes.
Under the shake-up, banks and building societies must assess whether changes to local services, such as closing branches or cash machines, leave local communities lacking ways to take out or pay in cash.
The firm will have to consider the needs of local communities, shops and businesses and make sure any change put in place maintains reasonable access to cash.
Another trigger for a review could be residents, businesses, local representatives or charities feeling that their community is not sufficiently served when it comes to the ability to pay in or withdraw money.
Charities or local groups will be able to share a collective view of community needs, including the most vulnerable residents and businesses which rely heavily on cash.
People or organisations could make a request to Link as the oversight body or to any designated financial firm.
Designated firms include: AIB Group (UK); NatWest/RBS/Ulster Bank; Bank of Ireland (UK);; Bank of Scotland/Halifax/Lloyds; Nationwide Building Society; Barclays; Northern Bank (Danske); Clydesdale Bank/Virgin Money; Santander UK; HSBC UK; the Co-operative Bank; and TSB.
Firms will need to assess and fill gaps, or potential gaps, in cash access provision that significantly impact consumers and businesses.
Mr Aladhal said one example could be if someone running a charity finds they are having to travel a long way to deposit money raised for their good cause.
“Our rules are about making sure that the banks and the co-ordinating body, being Link, listen to that,” he said.
They will need to consider things like the journey times of individuals and businesses as well as the reasonableness of that travel time and the cost— Emad Aladhal, FCA
The assessment must be completed within a 12 week-period.
Mr Aladhal said: “They will need to consider the existing facilities to deposit cash, the existing facilities to withdraw cash, they will need to consider things like the journey times of individuals and businesses as well as the reasonableness of that travel time and the cost.
“So, it’s not about looking at a map and going as the crow flies, it’s actually about: Is there public transport? How expensive is it for people to use it? How difficult is it? Et cetera.”
After the 12-week process, financial firms will go back to communities to set out their thoughts – and the communities will be able to feed back into that, he said.
Mr Aladhal said: “If they identify a gap, our expectation is that they need to fill it as reasonably quickly as possible.”
Depending on the particular circumstances, ways to fill the gap might include maintenance of a bank branch, installing an ATM, the introduction of a banking hub (where several banks share facilities) or a solution involving the Post Office, which has an agreement with banks allowing customers to do their day-to-day banking over its counters.
Mr Aladhal said firms would need to make sure that “whatever is suggested is really catering for that community’s need”.
The assessment should reflect the totality of the needs of the community, he said.
The FCA will use data to oversee how the rules are working in practice.
Its Financial Lives Survey found more than 6% of adults (3.1 million) used cash to pay for everything or most items in the 12 months up to May 2022.
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— Sheldon Mills, FCA
This percentage was 9% among vulnerable groups, including consumers who are digitally excluded, have poor health or are on low incomes.
Sheldon Mills, executive director for consumers and competition at the FCA, said: “The way we spend money is changing, and far fewer of us use cash day-to-day.
“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.”
The Financial Services and Markets Act 2023 set out Parliament’s intention to protect access to cash.
The regulator’s powers, given to it by Parliament to ensure that reasonable access to cash withdrawal and deposits is maintained, will not prevent bank branches closing. But the powers will have an impact where branch closures would leave significant gaps in local cash access.
Thousands of bank branches have disappeared from high streets over the past decade.
Consumer group Which? said in May that more than 6,000 bank branches had closed since 2015.
In August, HSBC promised it would not announce any new closures of its bank branches until at least 2026.
Link said a further 15 new banking hubs have been confirmed as a result of the new rules, taking the total so far to 163, with 81 already open and more to follow.
Adrian Roberts, deputy chief executive of Link, said: “What’s key is that as a result of the new rules, Link will be able to recommend more banking hubs and alongside free-to-use ATMs and post offices, access to cash will be protected for many years to come.”
Cat Farrow, chief customer officer, Cash Access UK, said: “We’re delighted to see this commitment to bringing more banking hubs to communities across the UK.”
The Government recently held a banking hubs roundtable with industry leaders, with a commitment to 230 hubs being delivered by the end of 2025 and a further 120 rolled out by the end of the Parliament – meaning a total of 350 banking hubs should be open by the end of the Parliament.
