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Posted: Wed 24th Jul 2024
Banks and building societies intending to shut branches will need to weigh up if local consumers and small businesses lack access to cash and provide necessary solutions.
From 18 September, new rules by the Financial Conduct Authority (FCA) mean the organisations will have to decide if closing branches will leave residents without sufficient cash services, and respond to residents, community organisations and representative groups requesting an assessment of whether there are gaps in local cash access.
If gaps are identified, measures such as banking hubs, ATMs, and Post Office facilities will need to be introduced.
The new cash access system applies to 14 banks and building societies, and branches will have to be kept open until any additional cash services identified are available.
The tougher FCA rules follow fears that small businesses and vulnerable consumers could struggle without access to cash. According to Consumer Group Which?, UK banks have closed more than 6,000 branches since 2015.
A new report by UK Finance said contactless payments rose by 7% to 18.3 billion in 2023, with almost four out of 10 UK adults living largely cashless lives.
The number of people, however, mainly using cash last year rose to 2.6% of the population. This was an increase from 1.7% in 2022.
Sheldon Mills, executive director of consumers and competition at the FCA, said:
"Three million people continue to rely on cash, even as digital payments become more popular. 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."
In its General Election manifesto, the new government pledged to open 350 banking hubs over the next five years. The hubs provide face-to-face banking services including access to cash withdrawals, cash deposits, plus banking advice and support.
This promise was welcomed by Enterprise Nation. Founder Emma Jones said:
"Guaranteeing access to banking services on the high street through the acceleration of banking hubs is a positive step forward and could form part of a wider regeneration of our high streets to enforce landlords to throw open empty shops, reinstating our high streets as a community hub powered by small businesses."
In the King's Speech, the government announced the English Devolution Bill which will include a new right to buy for valued community assets, such as empty shops, pubs and community spaces "to help to revamp high streets and end the blight of empty premises".
