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City watchdog sets out access to cash expectations

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16/07/2020
The financial regulator has set proposals for firms when considering closing branches or converting free to paid-for ATMs to ensure customers are treated fairly when it comes to accessing cash.

The draft guidance by the Financial Conduct Authority (FCA) sets out its expectation for banks, building societies and credit unions when it comes to branch closures or converting free ATMs to paid-for ATMs in light of the coronavirus crisis.

They should “carefully consider” the impact of such moves for customers’ everyday banking and cash access needs, the FCA said.

As such, the proposals state firms will need to keep the FCA informed of closure or ATM conversion plans, and consider alternative actions such as sharing services with other providers, providing mobile banking hubs or cash delivery services, commissioning a free-to-use ATM or supporting customers to use digital channels.

Firms would also need to give customers no less than 12 weeks’ notice of closure or conversion decisions.

The guidance states: “This would give customers time to take action in light of that information, such as changing banking provider. We would also expect firms to keep their analysis of customer impact and potential alternatives under review during the period between the proposals being announced and implemented, and keep us informed of changes to its plans.”

Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “Access to cash is a priority for the FCA. While in the recent climate we have seen some consumers move to digital payments, we have also seen the importance of the continued availability of cash to many consumers, including those most vulnerable. We welcome the government’s plans to legislate as a longer-term solution, and the work the industry is doing already to maintain cash.

“Firms have managed access well through covid-19, and we have seen many good examples of how they have used alternatives to branches and ATMs during the crisis. We expect them to build on this work and to continue to think about consumer needs as they take decisions on future closures.

“We’ve published this guidance to remind firms of our expectations, which firms need to take account of throughout their decision-making process on the future of their branches or ATMs.”

‘Most vulnerable likely to struggle in cashless society’

Laura Suter, personal finance analyst at investment platform AJ Bell, said the FCA has fired a warning shot to banks thinking about shutting more branches and charging for ATMs as a money-saving measure following the corona-crisis.

She said: “People still reliant on cash have faced ever-decreasing options as bank branches and ATMs have been shut in their droves in recent years. In total more than 3,500 branches have closed over the past five years, averaging 55 branches a month, as banks look for easy ways to cut costs.

“Some areas of the UK have been left as a cash desert, with people having to drive miles in order to be able to get cash out – not an option for the oldest or most vulnerable in society.”

“Many might dismiss cash usage as a thing of the past but the FCA’s own research shows one in 10 people wouldn’t know how to cope without cash, and the most vulnerable in the UK are more likely to struggle in a cashless society.”

Comments on the guidance can be submitted until 30 July.

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