From Wednesday 18 September, banks and building societies will need to “plug significant gaps” when it comes to providing cash services to communities.
This means keeping bank branches and ATMs open until any additional cash services are made available.
They will also need to assess cash access and understand if additional services are needed when changes are being made to local services, the Financial Conduct Authority (FCA) confirmed.
Firms will also be required to respond to local residents, community organisations and representative groups, who will be able to request an assessment of whether there are gaps in local cash access.
All in all, it makes a voluntary scheme a legal requirement, and 14 banks and building societies have been designated by the Government to deliver this new cash access system.
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Gaps in cash access could be filled with a range of measures, including banking hubs, ATMs and Post Office branches.
But the FCA powers won’t prevent the closure of bank branches, though it said it will have an impact where branch closures could leave a big hole in cash access provision.
According to LINK – the ATM network – 1,541 bank branches have been flagged for closure since January 2022.
Sheldon Mills, executive director of consumers and competition at the FCA, said: “Three million people continue to rely on cash, even as digital payments become more popular. And many small businesses still need somewhere to safely deposit their takings each day.
“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.”
It comes as the FCA revealed that being in a low-income household (less than £15,000 per year) and having low digital capability or access has the strongest association with reliance on cash.
‘Banking is changing but access to cash is vital’
Adrian Roberts, deputy CEO at LINK, said: “Over the past decade or more, while we have seen more people choose and prefer the convenience of banking and paying for things online, the inevitable consequence has been the reduction in the number of cash machines and bank branches. Banking is changing, but as last week’s global IT outage shows, access to cash remains vital for consumers and businesses and the new regulations will help LINK and the banks work together with the FCA to protect access to cash on the high street for years to come.
“Today’s regulation is good news for consumers. Much has been achieved over the past couple of years, especially with the roll-out of banking hubs and deposit services but, crucially, this makes a voluntary arrangement law.”
LINK confirmed that, to date, it has recommended almost 150 banking hubs and 129 deposit services with Cash Access UK and Post Office opening new cash services.
Rocio Concha, Which? director of policy and advocacy, said it led the campaign for these new rules, backed by legislation after the previous guidance was “insufficient” amid a wave of ATM and bank closures “that left more than 30 parliamentary constituencies – covering nearly three million people – without a single branch”.
“It’s encouraging that the FCA is moving forward with this plan. It must now be prepared to closely monitor how banks and building societies are behaving and step in with enforcement action if they are falling short of what is needed to maintain cash access in communities.
“Industry initiatives such as banking hubs will likely be the future of banking in lieu of shuttered branches, but their roll-out remains too slow for consumers to feel their benefit. The Government must deliver its commitment to open at least 350 new hubs in the coming years – and revise that total upwards if necessary,” Concha added.
Related: Number of people mainly using cash rises amid contactless trend
