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Uncertainty over ‘reasonable’ access to cash protection

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The government has set out plans to protect cash deposit and withdrawal facilities, but further clarity is needed on what it deems as ‘reasonable access’.

Cash is the second most frequently used method of payment in the UK, and around 5.4 million adults rely on cash to a very great or great extent in their daily lives.

But with bank branch and free cashpoint closures accelerating over recent years, campaigners have called for greater measures to protect access to cash.

The government has today announced that UK banks and building societies will be subject to new powers by the city watchdog – the Financial Conduct Authority – to ensure the continued availability of withdrawal and deposit facilities.

This will be at both a national and local level but the government is due to set out its expectations for a “reasonable distance” for people to travel when depositing and withdrawing cash.

It said, “this will reflect the existing spread of cash withdrawal and deposit facilities in the UK”.

Currently, around 96% of the population are within two kilometres of a free-to-use cash access point. This includes free-to-use ATMs, bank branches and Post Office branches.

What’s a reasonable distance?

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “The streets aren’t going to be paved with cashpoints, but we’re not going to get cash deserts either. The government plans to freeze us in our current position, and halt the ever-decreasing circle of access to cash, by setting out the maximum distance most people will have to travel to get their hands on notes and coins.

“This doesn’t mean a halt to bank branch closures, but it will mean that in some cases, when a branch closes, access to cash will need to be maintained another way.”

However, she added: “A great deal hinges on what the FCA decides is a reasonable distance. When it checked in mid-2021, it looked at access to cash within 1km, 2km and 5km. It found the majority of people were within 1km of free access to cash (87%), and 95% were within 2km. In rural areas this fell to 53% within 1km and 77% within 2km. There’s every likelihood that 2km will be the distance it picks.

“This is an incredibly difficult call. Given that the five million adults who rely on cash include the most vulnerable groups, there’s a real risk that an awful lot of them will struggle to cover a 4km round trip each time they need money – especially if they don’t have transport and have mobility issues. If the FCA protects access to cash within 2km, it begs the question as to whether this actually offers all the protection that really vulnerable people really need.”

Economic secretary, John Glen, said: “Millions of people across the UK still rely on cash, particularly those in vulnerable groups, and today we are delivering on our promise to ensure that access to cash is protected in communities across the country.

“I want to make sure that people are still able to use cash as part of their daily lives, and it’s crucial to ensure that no person nor community across the UK is left behind as we embrace a more digital world.”

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