The UK’s Financial Conduct Authority (FCA) has laid out a set of new rules to help safeguard access to cash for customers and counteract a key challenge as a result of the world becoming increasingly digital.
Under the proposals, designated banks and building societies will need to assess gaps in access to cash taking into account local factors such as demographics and transport. Where firms identify gaps, they will need to act to address these needs, the FCA said.
Sheldon Mills, Executive Director of Consumers and Competition at the FCA said: ‘We know that, while there is an increasing shift to digital payments, over 3 million consumers still rely on cash – particularly people who may be vulnerable – as well as many small businesses. It’s important that we support consumers impacted by recent innovations.
‘These proposals set out how banks and building societies will need to assess and plug gaps in local cash provision. This will help manage the pace of change and ensure that people can continue to access cash if they need it.’
As of Q1 2023, 95.1% of the UK population are within 1 mile of a free to use cash withdrawal point, such as cash machines or Post Office branches, while 99.7% of the UK population are within 3 miles.
What the proposals say?
Under the proposals, designated firms will be required to carry out cash access assessments when changes are being made to cash access services so they can understand whether additional services are required to meet local gaps. They will also have to respond to requests from local residents, community organisations and representatives to consider, assess and plug gaps.
If assessments show that there is or will be a significant local gap, the rules will require designated firms to deliver reasonable additional cash services to fill in this gap. Significantly, they must ensure they do not close cash facilities, including bank branches, until any additional cash services identified are available.
The proposals follow new powers granted to the FCA by the Financial Services and Markets Act 2023. Although the powers don’t prevent bank branches from closing, the rules will have an impact where branches are a key local source of cash. The FCA added that retailers, however, will still have the power to decide whether to accept cash or not under existing law. It said expects to finalise the rules by Q3 of 2024.
