Save, make, understand money


Communities to be given legal right to access cash

Emma Lunn
Written By:
Emma Lunn

Households and businesses will have the legal right to withdraw and deposit cash within “a reasonable distance”, under government plans.

The Treasury is consulting on rules that mean people shouldn’t have to travel more than a specific distance to access coins and notes without a charge. It is likely that the distance will be set at 1km.

The proposals are designed to ensure cash remains available to consumers and businesses that need it. Campaigners fear some retailers could stop accepting cash if it becomes too burdensome to process, while small businesses, have been affected by closing bank branches.

The government says there’s already a framework for a geographical limit, because Link’s cashpoints and the Post Office have geographical commitments. It proposes that rules will apply to the big high street banks and will be overseen by the Financial Conduct Authority.

According to the Post Office, 8 million people have said they would struggle to manage their money without cash, while 55% of small businesses rely entirely on cash payments.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “There will be life after the death of the branch network. The government’s consultation into access to cash will come as a bitter blow to those who can’t imagine life without their local branch, but will be a huge relief for the millions of people who just need to be able to get hold of cash without paying a fee or travelling miles.

“Cash has been getting harder to get your hands on. 4,000 banks have closed their doors in the last six years, which is the equivalent of two branches every day, and 16% of people say that a branch they used to use regularly has closed down in the past 12 months.”

The closure of bank branches is a vicious circle. The more that close, the more people move online, so there are fewer people relying on high street branches, so more of them close. The pandemic picked up the pace of this ever-decreasing circle, closing more branches temporarily and causing online banking to spike. For example, M&S Bank has closed all its in-store branches from today, saying that more people are banking online.

For those attached to branches, the bad news is that the government isn’t going to demand that they stay open. Instead, the proposals will focus on ensuring you don’t have to travel miles to get your hands on your money. It has already legislated to allow cashback without a purchase.

John Howells, CEO at Link, said: “We are pleased the government has taken the next step in protecting cash. The UK has been moving towards digital and cashless payments over the past decade, however, the pandemic has turbocharged this shift with ATM usage down almost 50% in two years.

“There are still five million people who rely on cash and while the UK has excellent coverage at the moment, we need a long-term plan to protect vulnerable consumers who cannot yet use digital or contactless payments. We look forward to working with the government and the rest of our industry to deliver for all consumers across the country.”