FCA confirms access to cash plans as banks close

Banks in the UK will be banned from shutting down too quickly under new rules aimed at helping people access cash. The Financial Conduct Authority (FCA) has introduced a policy that requires banks to provide alternatives for customers affected by branch closures.

While the changes cannot prevent the closure of bank branches, they will ensure that banks offer alternative services, such as banking hubs, ATMs, and Post Office facilities. The move comes as over 6,000 bank branches have closed in the past decade, forcing customers to switch to online banking. The FCA’s research found that around 3 million people still rely on cash, with lower-income households being the most affected.

Banks and building societies will need to weigh up if local communities lack access to cash services, like branches and ATMs, and plug significant gaps.

Gaps in cash access could be filled with a range of measures, including banking hubs, ATMs (including deposit ATMs) and Post Office facilities. The FCA’s powers won’t prevent the closure of bank branches – but will have an impact where branch closures leave significant gaps in local cash access.

The FCA has made changes to the rules it consulted on, including extending the period for banks and building societies to carry out cash access assessments, giving local communities more time to make their case. Firms will also be able to review the provision of identified cash services after 2 years.

The FCA has also published research on who relies on cash. This found that being in a low-income household (less than £15,000 a year) and having low digital capability or access has the strongest association with reliance on cash.

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.”

Martin McTague, National Chair of the Federation of Small Businesses (FSB), said “Overall, the FCA’s new access to cash rules could play an important role in stemming the loss of cash infrastructure in the UK – but they are missing half of the picture, namely how to restore access to communities which have lost much or all of their cash points and bank branches. Many bank branches have closed in recent months and years, and doubtless more will do so before the rules come into effect in mid-September.

“Small businesses’ needs must be a priority – if local firms don’t have practical ways to handle the cash they get from payments, fewer of them will be able to offer cash as a form of payment in the first place.

“The FCA is introducing cash access requests, which will allow anyone to ask for an assessment of cash access levels in their area, but these risk being underutilised by businesses and communities due to a lack of awareness. The banks and building societies subject to the FCA’s rules should be made to do their utmost to let the public know that they have a right to request a cash access review, so nowhere is left behind.

“After a cash access request is made, any identified additional services needed must be delivered within three months of the assessment or closure, which is good news, as is the rule that branches must stay open while these services are put into place.

“For many people, cash is their main payment method, and in order for them to be able to pay for goods and services, the infrastructure needs to be there to enable small firms to continue to accept cash, if they wish to.”

Anna Roughley, Head of Insight at the Lending Standards Board (LSB), said “For many customers digital banking has made access to financial services much more convenient than ever before, but there remains a key place for cash – and, more broadly, branch banking. Many customers choose banks with in-branch services as these can help with their specific access needs, or can support those, like small businesses, who need flexibility in how they engage with the financial services sector.

“Financial services firms must have a good understanding of their customers and how they need to engage, ensuring that, as services evolve, these customer needs continue to be met.”