Consumer group Which? reported in May that over 6,000 bank branches have closed since 2015. Major banks argue that fewer customers are using in-person services, with a preference for mobile and online banking
Banks and building societies that are closing branches will be required to ensure people can still access cash, under new rules set by the UK’s financial watchdog, the Financial Conduct Authority (FCA).
The FCA announced that these plans will take effect from September 18. These new powers will not stop the closure of bank branches.
Instead, they will mandate banks to fill significant gaps in local cash access. This action is a response to the thousands of branch closures across the UK by high street lenders in recent years, leaving many towns without any local branches.
Consumer group Which? reported in May that over 6,000 bank branches have closed since 2015. Major banks argue that fewer customers are using in-person services, with a preference for mobile and online banking.
However, the FCA’s research found that an average of three million people still depend on cash, with lower-income households more likely to be excluded from digital services and more dependent on cash. Sheldon Mills, the FCA’s executive director of consumers and competition, said: “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.” The FCA has announced new rules that will require banks and building societies to fill gaps in cash access with measures such as banking hubs, ATMs and Post Office facilities.
Banking hubs allow staff from several banks to share the same space, helping to fill gaps left in the system from branch closures. They have a counter service operated by the Post Office, allowing customers to conduct routine banking transactions like withdrawing and depositing cash and paying in cheques.
Banks will also need to assess the needs of local communities and make sure they are responding to residents and groups that raise concerns. The rules go further than the current, industry-run, voluntary scheme. Meanwhile, Labour pledged to open 350 banking hubs in towns and villages across Britain over the next five years prior to winning the General Election.
Adrian Roberts, the deputy chief executive of ATM network and cash access scheme Link said: “Today’s regulation is good news for consumers. Much has been achieved over the past couple of years, especially with the rollout of banking hubs and deposit services, but crucially this makes a voluntary arrangement law.”
“To date, we have recommended almost 150 banking hubs and 129 deposit services with Cash Access UK and Post Office opening new cash services on the high street every week.”
Alice Haine, a personal finance analyst for Bestinvest by Evelyn Partners, said the new plan was a “landmark move” by the FCA. She remarked: “Access to cash and the ability to use notes and coins in consumer transactions has become a particular challenge for the elderly, the less digitally capable, the unbanked and those on low incomes, who rely on cash to manage their finances.”
She further explained that the regulations will compel banks to “listen to the concerns from local communities” and provide extra cash services or extend the availability of existing facilities until other solutions are in place.
