UK consumers still have solid access to cash according to the Financial Conduct Authority (FCA), the country’s finance regulator, despite regular high-street bank closures.
The FCA has provided an update on the progress of its cash protection measures, including new rules introduced in July, which required banks and building societies to provide consumers with continued access.
A subsequent reassessment of the UK’s cash access and ATM management network has come to some conclusions about the current scenario – a scenario the Labour government has recently doubled down on ambitions to change.
As it stands, FCA states that 15 communities which previously had no banking hub will not get one, six communities will have an ATM at the local banking hub, and a further six will receive an enhanced Post Office or an automated deposit service.
‘The way we spend money is changing, and far fewer of us use cash day-to-day,” said Sheldon Mills, Executive Director for Consumers and Competition at the FCA.
“We don’t want to stand in the way of change, but we do want to ensure reasonable access for those who continue to rely on cash. Our new rules are already having an impact, protecting vital services for communities across the country.’
The UK retail banking sector has been shrinking significantly over recent years. Most banks cite the rise in popularity of online and mobile banking options, stating that many customers have transferred over from retail banking to these functions.
In the most recent closures, Lloyds Banking Group announced 292 branch closures across the UK by 2025. This announcement came on the same day Lloyds, Santander, Barclays and NatWest pledged to support the opening of 230 hubs after a meeting with City Minister, Tulip Siddiq.
The Labour Party has been vocal about its ambitions to create local banking hubs for some time. In a policy document published at the start of the year, Rachel Reeves – then Shadow Chancellor of the Exchequer – made the party’s goals clear.
Retail banking closures under the Conservative government have been the target of a lot of derision by Labour, which has reiterated its belief that many consumers have been left in ‘banking deserts’. Now in government, the party seems to be working to achieve this.
So too is the FCA, though the timing of the regulator’s assertions that access to cash is improving coming shortly after Lloyds announced its latest round of closures is not ideal. However, the FCA has not just been praising its own efforts, as some stakeholders have commented on the positive impact of reforms.
Under the new rules, banks and bundling societes need to assess whether closing bank branches or cash machines leave communities with limited access to cash. Local representatives, charities, residents and businesses can also request a review if they feel there is a gap in cash access.
These reviews will be conducted by LINK, which will have 12 weeks to complete an assessment to examine whether gaps exist or not. If large gaps are found, banks and bundling societies will be required to fill them via banking hubs, cash machines, deposit ATMs and Post Office facilities.
“We welcome the FCA’s new rules, which come into force today, for banks and building societies to protect local communities’ access to cash,” remarked Paul Riseborough, Managing Partner, UK and Ireland at Capco, a financial services technology management firm.
“Access to cash continues to be a key part of the wider financial system, and while digital alternatives work for many, cash remains an important part of the financial lives of some, especially vulnerable customers who struggle to embrace digital means. Today’s rules will be vital in protecting these customers, and the FCA’s update regarding their impact so far is especially promising.
“With the FCA’s focus on protecting the consumer only increasing by the day, it is vital that banks and building societies stay focused on aligning with these rules and demonstrating how they are supporting all their customers.”
