Banks face fines for failing to provide free access to cash 

21st August 2023

The Treasury has published new guidelines for the provision of cash. The new rules will require banks to provide facilities for making deposits and withdrawals within a three-mile radius of retail customers and businesses. 

The government statement has set the minimum expectations on banks to protect services for people and businesses wanting to withdraw or deposit cash. They can expect to withdraw cash without any fees – something that has been set out in law.

As part of this move, the Financial Conduct Authority (FCA) has been provided new powers by the government to protect the provision of cash access services. This includes protecting cash access without any fees for those who hold personal current accounts.

Building on laws granted through the government’s Financial Services and Markets Act 2023, the FCA will use these newfound powers to make sure banks and building societies are keeping up to these standards – and have the power to fine them if they do not.

While the country is moving further away from using coins and notes with the number of online payments rising from 45% to 85% in the past ten years, cash can still be an integral part of many businesses and people’s lives.

Economic Secretary to the Treasury, Andrew Griffith, said “Whilst the growing choice and convenience of digital payments is great, cash has an important and continuing role to play. That’s why we are taking action to protect access to cash in law and laying out that this means fee-free withdrawals and the availability of cash facilities within a reasonable distance.”

“People shouldn’t have to trek for hours to withdraw a tenner to put in someone’s birthday card – nor should businesses have to travel large distances to deposit cash takings.These are measures which benefit everyone who uses cash but particularly those living in rural areas, the elderly and those with disabilities.”

As it stands, the vast majority of people living in urban areas can access cash deposit and withdrawal services within one mile; with rural-dwellers around three miles away. Today’s policy statement makes clear that the FCA should use its powers to maintain this level of coverage, while recognising that needs may differ by location and change over time.

It also makes clear that  if a service is withdrawn and a replacement service is needed – this should be put in place before the closure takes place. The FCA is also required to ‘have regard’ to local deficiencies in cash access. The policy statement sets out that the regulator should consider factors such as the opening hours and distance to cash access services, as well as the need for in-person assistance.

Laws introduced in the Financial Services Act 2021 have delivered cashback in over 2,500 shops across the UK – without any need to buy something in store – through the LINK network.

Anna Roughley, Head of Insight of the Lending Standards Board aid “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.”

“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.“