Banks and building societies shutting branches will need to do more to make sure people can still access cash, under new rules being introduced by the UK’s financial watchdog.
The Financial Conduct Authority (FCA) said its plans will come into effect from September 18 but added that the new powers will not prevent the closure of bank branches.
Instead, it will require banks to make sure they are plugging significant gaps in local cash access.
The move comes as Britain’s high street lenders have shut thousands of branches across the UK in recent years, leaving many towns without any local branches.
Consumer group Which? said in May that more than 6,000 bank branches had closed since 2015.
Our investigation paints a shocking picture of insurance firms’ failure to handle customers’ claims.
— Which? (@WhichUK) July 23, 2024
These firms are ripping us off.
This will only stop if the regulator cracks down on companies that consistently fall short. #EndtheInsuranceRipOffhttps://t.co/JGMC53j6qe
Banks closing branches face new watchdog rules
Major banks say that there are fewer customers who are using in-person services, with more people preferring to use mobile and online banking.
But the FCA said its research found that three million people on average still rely on cash, with lower-income households disproportionately likely to be excluded from digital services and more reliant on cash.
“And many small businesses still need somewhere to safely deposit their takings each day,” said Sheldon Mills, the FCA’s executive director of consumers and competition.
“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.”
The FCA said its new rules will require banks and building societies to fill gaps in cash access through measures such as banking hubs, ATMs, and post office facilities.
Banking hubs allow staff from several banks to share the same space, helping to fill gaps left in the system from branch closures.
They have a counter service operated by the Post Office, allowing customers to conduct routine banking transactions like withdrawing and depositing cash and paying in cheques.
Banks will also need to assess the needs of local communities and make sure they are responding to residents and groups that raise concerns.
The rules go further than the current, industry-run, voluntary scheme.
Meanwhile, prior to winning the General Election, Labour pledged to open 350 banking hubs in towns and villages across Britain over the next five years.
Adrian Roberts, the deputy chief executive of ATM network and cash access scheme Link said: “Today’s regulation is good news for consumers.
“Much has been achieved over the past couple of years, especially with the rollout of banking hubs and deposit services, but crucially this makes a voluntary arrangement law.
“To date, we have recommended almost 150 banking hubs and 129 deposit services with Cash Access UK and Post Office opening new cash services on the high street every week.”
RECOMMENDED READING
Every bank closure this year including Barclays, Lloyds & more
Alice Haine, a personal finance analyst for Bestinvest by Evelyn Partners, said the new plan was a “landmark move” by the FCA.
She added: “Access to cash and the ability to use notes and coins in consumer transactions has become a particular challenge for the elderly, the less digitally capable, the unbanked and those on low incomes, who rely on cash to manage their finances.”
She said the rules will mean banks must “listen to the concerns from local communities” and offer additional cash services or keep facilities open for longer until alternative options become available.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel