Regulator investigates the scale of bank cash machine closures

And the economic secretary to the Treasury, John Glen, who was concerned at how Lossiemouth ran out of cash nine days ago after the closure of a local Bank of Scotland branch has suggested it "is a good case study for the regulator to be examining".

It comes as the Herald revealed the number of cash machines in Scotland has disappeared at a rate of 32 a month in the 11 months to April. There are 6008 cashpoints in Scotland, with 359 ATMs gone over 11 months.

Lossiemouth

Scotland has also lost one in three bank branches in just eight years, with over 400 closing since 2015, making it one of the worst affected areas in the UK, and more often than not, the cashpoints will also go with them.

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Last month the ATM Industry Association, the non-profit trade group, whose members include banks such as HSBC, independent ATM operators and payment systems such as Visa, warned that nearly one in five of Scotland's existing free to access cash machines are expected to introduce charges to customers in the next 12 months.

They say the problem revolves around a 10% or 2p cut in the fee that the bank pays cash machine operators every time money is withdrawn.

The regulator is carrying out a longer-term review looking into the factors that affect the distribution of ATMs across the country and what be done in future to make sure people have the access to cash they need or want.

It will examine consumers’ and society’s cash needs, and the incentives to keep cash machines, including the controversial fees structure.

It is planning to set out a view on the way forward for interchange fees before the end of 2019.

The PSR says that if there is evidence that shows the payment systems industry is failing to deliver greater competition, more innovation and greater benefits for businesses or consumers, then the can bring in a series of measures to demand action is taken.

Those could also involve amending agreements on fees and charges and to take action where they see anti-competitive behaviour.

A PSR spokesman said: "In October 2018, we gave LINK [which oversees the UK's largest cash machine network] a direction to make sure it does all it can to meet its commitments to protecting the broad geographic spread of free-to-use ATMs.

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"We are aware that some ATMs have changed from free-to-use (FTU) ATMs to pay-to-use (PTU). We are looking into this and if it impacts on the commitment LINK has made to us to protect the broad geographic spread of FTU ATMs we will take action.

"We are working with other regulators and government to address access to cash over the longer term because it’s important that people continue to have choice in how they access their cash."

Chris Hemsley, the PSR's head of policy, says cash action was needed now to protect free access to cash from ATMs, ensuring that the current geographic spread of cash machines is protected.

But he suggested at Which's cash summit on Wednesday that in the longer term, increasing access to cashback in shops could be part of the solution.

Ten years ago, cash accounted for more than six out of ten payments in the UK but according to the banking industry body UK Finance, it is anticipated to fall to less than one in 10 by 2028.

In 2017, debit cards overtook cash for the first time as the most frequently used payment method in the UK.

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Mr Hemsley said: "While the growth of electronic payments and innovation brings benefits to many of us, in terms of convenience and new tools to manage our money, we all need to be mindful that it also risks leaving others behind."

Westminster Moray Conservative MP Douglas Ross who secured a debate raising concern about cash machine closures in his area said that last year he wrote to every bank operating in Scotland about establishing shared banking hubs where branch closures could leave customers financially excluded but said the response was "disappointing".  He said some ignored the suggestion and others said it was not right for them.

"We have to do far more to get the banks to work together," he said.

John Lamont, the Conservative MP for Berwickshire, Roxburgh and Selkirk said that in Coldstream, Hawick and other towns in his constituency when the banks have shut and the cash machines have gone, businesses have noticed a "significant decrease" in footfall and sales, which he said "undermines the economic viability of the high street".

Another Conservative MP, Stephen Kerr said that in his Stirling constituency, Balfron, Bannockburn, Bridge of Allan and St Ninians have no bank branches at all, owing to recent branch closures, and Callander is down to its last branch.

"When a town is down to its last bank and that bank is threatened with closure, I strongly believe that it is right for the Government to act - and I say that as a Conservative Member of Parliament," he said.

"We had an anomalous situation in Bridge of Allan [last year] where the Clydesdale Bank and the Royal Bank of Scotland both closed their branches at the same time. Each bank justified its closure by citing the existence of the other branch. How ridiculous is that?

"They have now both closed leaving the people of Bridge of Allan without a bank branch, despite both banks stating that there would be one."

LOSSIEMOUTH

Lossiemouth became the centre of the debate as Scots MPs have raised their concerns about people's access to cash amidst a raft of bank closures and cash machines.

Cash machines ran out of cash nine days after the closure of a local Bank of Scotland branch. It left a town with almost 8,000 residents with no cash whatever.

Locals were having to devise other ways to get their hands on cash, including making supermarket purchases to claim cash back, with every other ATM in the town running out of money.

Four branches have closed in Lossiemouth in recent years with banks saying demand for them is declining with the advent of online services..

Lossiemouth Community Council is appealing the decision to lose what they say is the last bank in town with the Financial Ombudsman - but are angry at the lack of access to cash.

Lossiemouth Community Council described the situation as "an absolute disgrace" adding: "It is not just residents who suffer, it's the businesses who deal in cash."

A spokesman added: "Our community leaders are working to at least get another cash machine in Lossiemouth and are still in contact with banks about opening a branch or a banking centre in Lossiemouth."