According to the new policy, banks will be subject to fines if they do not offer free access to cash withdrawals for both consumers and businesses. Specifically, the proposal specifies that free cash withdrawals and deposits must be accessible within a one-mile radius for individuals residing in urban areas. For rural regions, where concerns have arisen over limited access to cash, the maximum distance allowed is three miles.
The Treasury explained that the chosen distances were established to maintain the current level of coverage for free cash access, whether through ATMs or face-to-face services. If cash usage declines further in the future, these limits might be extended according to the BBC.
Under the revised guidance, in cases where a service such as an ATM or bank branch is withdrawn and a replacement service is necessary in the area, the replacement should be in place prior to the closure.
Presently, a voluntary agreement mandates that every High Street offers free access to cash within a 1-kilometer (0.62-mile) radius. The specifics of this new policy will be closely examined, including the starting points and practicalities of the stipulated distances.
This move comes in the context of a high closure rate of over 50 UK bank branches per month since 2015. The BBC reports rising concerns among activists that some businesses might stop accepting cash if processing it becomes too burdensome. On the other hand, banks argue that the decline in branch usage, accelerated by the COVID-19 pandemic, and the popularity of managing finances through smartphones justify reducing their branch network.
However, a recent survey conducted by Age UK revealed that among those uncomfortable with digital banking, primary concerns included fraud and scams, lack of trust in online banking services, and inadequate computer skills. The Financial Conduct Authority (FCA) will gain the authority to oversee cash access provision and impose fines. The relevant legislation was approved earlier in 2023.
According to sources quoted by the BBC, the new law compels the banking industry to safeguard existing levels of cash access and deposits while catering to diverse community needs. While navigating change, any planned service closures should be accompanied by suitable alternatives. Bank hubs, which are shared spaces accommodating multiple High Street banks, are among the alternatives suggested. These hubs are intended to serve communities that have lost all their local bank branches.
At the time of writing, only seven permanent hubs have opened in various UK locations, with 10 more leases signed. Organisers anticipate over 100 hubs to become operational in the coming years, although this number remains considerably lower than the number of branch closures.
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