The Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR) have published an updated assessment of the UK’s access to cash infrastructure, taking into account the impact of coronavirus (Covid-19), alongside new research on consumers who rely on cash.

The findings show that most people have reasonable access to cash through a combination of bank, building society, or Post Office branches and ATMs. The FCA and PSR estimate that 95.4% of the UK population are within 2km of a free cash access point and 99.7% are within 5 km.

Consumers’ ability to access banking services and cash can be affected when banks and ATM providers make decisions to close branches and cash machines.

In September 2020 the FCA published guidance on how it expects firms to approach branch and ATMs closures or conversions to make sure their customers are treated fairly. In May 2021 the FCA and PSR published a joint statement on their work to date and the FCA also reaffirmed its expectations for industry at the Which? Cash Summit.

The PSR recently published its second annual review of Specific Direction 8 (SD8) which ensures LINK does all it can to make free-to-use ATMs available for UK consumers. It has decided SD8 should remain in place until it expires in January 2022. The PSR will continue to monitor LINK’s commitment and how it is being met. The PSR is currently considering whether to issue a new direction to replace SD8 when it expires.

Since then, the Treasury has launched a consultation on establishing geographic requirements for the provision of cash withdrawal and deposit facilities, the designation of firms for meeting these requirements, and establishing further regulatory oversight of cash service provision.

Sheldon Mills, Executive Director, Consumers and Competition at the FCA said “Around 5 million adults say they still rely on cash, and we know that where access is removed, it can affect the most vulnerable in society. This is why we have intervened in the past to provide banks with guidance on what to consider when closing branches.”

“Our research shows that most of the UK population have reasonable access to cash: 95.4% are within 2km of a free cash access point. But there are still pockets of consumers, some displaying characteristics of vulnerability, who do not have sufficient access to cash. We expect firms to help protect access to cash and wider banking services in ways that meet consumers’ needs, and we continue to engage with firms closing their branches, to ensure that they treat their customers fairly. We will also review over the coming months how we can strengthen our guidance to help protect reasonable access to cash and banking services.”

The FCA and the PSR say that they will continue to work with Government to prepare for legislation, and with industry and other stakeholders on cash access issues. The FCA intends to update on the next steps on its work in Q4 this year.

Commenting on the research Sarah Coles, Personal Finance Analyst at Hargreaves Lansdown said “The pandemic has accelerated the ever-decreasing circle of bank branch closures, but the FCA has concluded that this isn’t causing widespread cash deserts, where people have to travel for hours to get their hands on their money. Unfortunately, it’s using a pretty generous definition of what makes cash accessible.”

“The branch network was already crumbling before the pandemic, but the crisis has exacerbated the trend as unreliable openings pushed more people online, cut the numbers going into branches, and gave banks a reason to close the doors forever. The FCA is concerned enough to be monitoring access to cash. Its latest statistics reveal that the vast majority of people are within ‘reasonable’ distance of a bank or building society, free-to-access-ATM or post office. Its announcement focuses on access within 2km.”

“Even with this generous definition, there some major gaps, including rural areas, where only around three-quarters of people are this close to their cash.”

“However, given that the 5 million adults who rely on cash include the most vulnerable groups, you have to ask whether 2km really is a reasonable distance to expect them to travel. Could anyone with mobility issues cover a 4km round trip each time they need money – especially if they don’t have transport? When the distance is narrowed down to 1km, the numbers look far less promising, with only around half of people in rural areas this near to their money.”

“The Treasury is currently consulting on introducing geographic requirements for making cash available, so you’ll never be more than a specific maximum distance from the nearest place to withdraw cash. Given that the FCA is measuring access to cash within 5km, 2km and 1km it begs the question of how far the Treasury will consider it acceptable to expect people to go for cash. And if it settles for one of these longer distances, whether it will actually make much of a difference to the most vulnerable who are most reliant on cash.”