Major change to cash rules as thousands of bank branches disappear from high street – and it’s good news for customers
A MAJOR change to cash rules have been outlined as thousands of bank branches have disappeared from the high street.
The Financial Conduct Authority (FCA) has proposed the new rules so that customers can still access cash despite the closures.
In the two years to the beginning of 2023 a total of 1,391 branches shut, according to the FCA.
Hundred have also either closed or been scheduled to close since then according to the UK’s largest cash machine network, LINK, which keeps track of any planned branch closures across the UK.
The changes will mean that banks have to assess issues customers may encounter.
These may include local factors like certain demographics and transport.
Where gaps in access are found, banks and building societies will need to act to address them.
The FCA also wants to prevent people from facing unreasonable costs to access their money, which could be through charges, travel costs or time.
Sheldon Mills, executive director of consumers and competition at the FCA stated: “We know that, while there is an increasing shift to digital payments, over three million consumers still rely on cash – particularly people who may be vulnerable – as well as many small businesses.”
He said that it’s important that consumers impacted by recent innovations are supported.
Mr Mills added: “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.”
The FCA found that in the first few months of 2023, 95.1% of the UK population were within one mile of a free-to-use cash withdrawal point, like cash machines or Post Office branches.
Meanwhile, 99.7% of the UK population is within three miles.
It said that it’s “important” to meet local needs, which may change over time, as the availability of cash access services can impact local communities, economies and high streets.
Under the new proposals, designated banks and building societies will be required to:
- Undertake cash access assessments when changes are being made to cash access services – to understand whether additional services are required to meet local gaps
- Respond to requests from local residents, community organisations and representatives to consider, assess and plug gaps
- Deliver reasonable additional cash services to fill gaps in provision where assessments show that there is or will be a significant local gap
- Ensure they don’t close cash facilities including branches until additional cash services identified are available
It’s important to note though that the FCA’s new powers, which are granted to the FCA by the Financial Services and Markets Act 2023, don’t prevent bank branches from closing.
But, the rules will have an impact where branches are a key local source of cash, making it easier for customers.
The FCA said it will make sure the rules work in “harmony” with its existing guidance on bank branch closures.
It also pointed out that existing laws allow retailers to decide whether to accept cash or not – so the FCA cannot force them to.
The consultation is open until February 8 and the FCA expects to finalise the rules by the third quarter of 2024.
It comes after the government announced earlier this year that banks could soon be fined if they don’t provide free access to cash withdrawals within three miles of consumers and businesses, the Government has announced.
It means that current account customers would no longer be hit with hidden fees at ATMs when they try to take money out.
The volume of payments in the UK that don’t involve cash surged from around 46% to 86% in the decade to 2022, according to the FCA’s consultation document.
Although, earlier this week the British Retail Consortium (BRC) said cash use has grown slightly for the first time in 10 years.
The BRC said cash was used in 19% of transactions last year, according to retailers, up from 15% the previous year.
The FCA document also said: “Our data suggests that in the two years to (the first quarter of) 2023, 1,391 bank and building society branches closed, as did 2,176 free-to-use ATMs.”
In November alone 82 branches left our high streets for good including Lloyds, Halifax and Bank of Scotland.
There’s also more to come this month, as another 19 branches will shut down by the end of the year.
If you’re struggling to access in-person services there are still a several ways customers can access basic banking services without having to head over to the next town.
Banking hubs, which offer traditional shared services, have been set up in several locations around the UK to help plug the gap — including Brixham, Cambuslang, Cottingham and Rochford.
If the latest raft of closures will leave you with no bank in your area, you should be able to do most basic tasks at your local Post Office.
You can use one of the Post Office’s nearly 12,000 branches to perform basic banking tasks — but not open new bank accounts or take personal loans and mortgages.
Many banks also offer a mobile banking service, which is where your bank brings a bus to your local area that has the services that are usually available at your branch.
You should call up your bank to see if it runs such a service and they will be able to tell you where and when it will be parked.
Other banks use buildings such as village halls or libraries to offer mobile banking services.
Meanwhile, here is the full list of towns at risk of having no banks after waves of closures.
Plus, we’ve rounded up all the banks and shops closing this week – including New Look and Barclays.
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