LSB: UK cash withdrawal regulations welcomed as vital to financial inclusion

Credit: Shutterstock
Credit: Shutterstock

The UK government is expanding cash availability across the country, with free cash withdrawals within three miles being implemented as law. 

The Lending Standards Board has described the regulation as key to financial inclusion, which has taken on a heightened level of importance as the economic climate has become increasingly tough and digital.

Anna Roughley, Head of Insight of the Lending Standards Board, commented: “We welcome the treasury’s announcement of new rules that will require banks to provide free cash withdrawals within three miles of consumers and businesses. Many people rely on cash for everyday transactions, such as paying for groceries or bills.

“The closure of bank branches in recent years has made it more difficult for people to access cash, especially in rural areas and for people with disabilities. This is an important step in ensuring that everyone has access to cash, regardless of their location – an essential for financial inclusion, which is the goal of ensuring that everyone has access to the financial services they need to participate fully in the economy.”

Roughley added that the firm is working on a range of initiatives to support financial inclusion: “At the Lending Standards Board, we are committed to working with other stakeholders, such as the government and businesses, to promote financial inclusion. 

“In addition to the new rules, we are also working on a range of other initiatives to promote financial inclusion, such as our recent report on Inclusion in Business Banking & Credit for disability and other access needs.”

Amidst a backdrop of branch closures, the government has decided that banks will be hit with penalties if they fail to meet the new regulatory requirements, as it eyes protection of current account holders from hidden fees when withdrawing cash. 

The steps come in response to the digital economy, which was fuelled by the pandemic. The new steps, according to many, don’t go far enough, with the importance of cash acceptance also being as cited as being vital, in an economy where many more vulnerable consumers still rely on cash.