Politics

Banks will be banned from leaving towns if it means residents can’t take out cash, under new FCA powers



Banks will be blocked from withdrawing their services from towns and villages which would be left without access to cash under new powers being given to the UK’s financial regulator.

The Financial Conduct Authority (FCA) will have the power to order the largest banks and building societies to continue offering services such as ATMs and mobile hubs so that residents can withdraw money on a regular basis.

Under the new powers, set to be included in the forthcoming Financial Services and Markets Bill, banks would still be able to shut down branches even when they are the last ones available in a particular community.

However, they would have to replace them with alternative services under certain circumstances and ensure they are readily accessible, leaving almost all Britons within two miles of a free cash dispensing point.

More than 4,700 bank branches have shut down since 2015 with 227 more due to close by the end of this year as banks seek to transition to more and more digital services.

John Glen, Economic Secretary to the Treasury, 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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The move was welcomed by the Scottish Government given the large number of relatively remote communities in Scotland that risk losing easy access to cash.

A spokesman said: “The Scottish Government welcomes this much-needed legislation to protect consumers’ access to cash.

“This is especially important to rural communities and is a lifeline to consumers, particularly the most vulnerable and small businesses.”

Martin Kearsley, banking product director at the Post Office said: “A powerful regulator ensuring the rights of millions of people who rely on cash can access it conveniently and securely for many years to come is something that we and many others have called for.

“We welcome the Government’s announcement and want to see legislation that protects the full cash cycle, including cash withdrawals to the penny, as many more people choose to control their household budgets by spending only what they physically have in their hands.”

The exact scope of the FCA’s powers – such as which banks and building societies will be included and the maximum distance between cash machines – will be revealed when the draft legislation is published.

Later this year ministers are also expected to come forward with proposals to ensure that as well as withdrawing cash, people are able to deposit it without travelling an unreasonable distance.

The UK’s cash deserts

The steady rise in online and mobile banking means bank branches have been closing at a rapid rate across the country.

According to research by Which?, almost half of the country’s bank branch network has closed since 20153f. Meanwhile, 12,178 free-to-use ATMs have disappeared from high streets in the last four years alone.

Some areas have become virtual cash deserts, despite Link, the UK’s largest cash machine network, estimating that 5.4 million people still rely on physical money.

Society’s most vulnerable groups are more likely to be reliant on cash, such as the elderly, people on low incomes, and those living in rural communities where residents often have to travel for miles to reach the nearest source.

Digital infrastructure is often poorer in these areas, making it harder for residents to embrace online banking and payments.

A lack of access to both cash withdrawals and deposit facilities can also impact businesses that use bank branches to change stock and take notes and coins off the premises for security.

Scotland was the first part of the UK to see over half its banks close, with 545 of its 1,040 branches already closing shop. i understands that one of its remotest cash machines, on Britain’s most northerly island, Unst, recently closed.

The parliamentary constituency of Carmarthen East and Dinefwr in Wales has seen the greatest number of bank branch closures since 2018, according to Which?. Of an original 15, only two are left.

But more urban areas have been impacted by closures too. Sheffield Hallam in South Yorkshire has seen each of its bank branches closed in the same period. With 25 ATMs still running in the area – which has a population of almost 92,000 – there are only 1.85 cash machines available per 10,000 residents.

Amy Walker



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