(qlmbusinessnews.com Fri, 18th Aug, 2023) London, UK —
Financial institutions may incur fines if they do not adhere to regulations requiring them to provide free access to cash withdrawals for both consumers and businesses, as confirmed by the Treasury.
Under the newly established policy, free cash deposits and withdrawals must be accessible within a one-mile radius for individuals living in urban areas. In rural regions, where concerns about “cash deserts” exist, the maximum distance will be extended to three miles.
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While this initiative is unlikely to stem the tide of branch closures and the decline in cash usage, it demonstrates the government's commitment to maintaining some level of accessibility for cash transactions.
According to the Treasury, the chosen distances are aimed at sustaining the existing coverage of free cash access through ATMs or face-to-face services. If the use of cash continues to decline, these limits could be extended in the future.
The new guidance outlines that if a service such as an ATM or branch is discontinued and a replacement service is required in the area, this should be established before the closure occurs.
Currently, a voluntary arrangement is in place to ensure that every High Street provides free cash access within a 1km radius. The details of the new policy, including the specifics of the designated distances, will be scrutinized.
Concerns for Vulnerable Groups
The UK has witnessed an average of more than 50 bank branch closures each month since 2015. Activists are worried that some retailers might cease to accept cash if the associated processing becomes burdensome.
Research indicates that cash remains essential for millions of people, particularly the elderly and those with disabilities. The closure of branches has disproportionately impacted disadvantaged areas.
Banks have cited the significant decline in branch usage, accelerated by the Covid-19 pandemic, and the popularity of managing finances through smartphones as reasons for reducing their branch networks.
However, a recent survey by Age UK highlighted that individuals uncomfortable with digital banking are primarily concerned about fraud and scams, a lack of trust in online banking services, and inadequate computer skills.
Small businesses have also expressed concerns about the diminishing use of cash, a trend that accelerated during the pandemic.
Nina Narramore, owner of the Norfolk Cheese Company, pointed out that card payments impose additional costs on her business. The impending closure of the town's last bank branch will exacerbate this situation.
The Treasury's Economic Secretary, Andrew Griffith, emphasized that “cash is here to stay.” He highlighted that the policy changes aim to benefit everyone, particularly those in rural areas, the elderly, and individuals with disabilities.
The Financial Conduct Authority (FCA) will be granted the authority to oversee the provision of cash access and impose fines. Legislation enabling this was passed earlier in the summer.
The new law obligates the banking industry to safeguard current levels of cash access and deposits, taking into account the unique needs of different communities. The goal is to have appropriate alternatives in place before services close.
Bank hubs, shared spaces for multiple High Street banks, are among the alternatives. These hubs aim to assist communities that have lost all their bank branches. While a few hubs are already operational, their numbers are significantly lower compared to the closures of individual branches.
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Jenny Ross from Which?, a consumer group active in this area, emphasized the need for the Financial Conduct Authority to use its newfound powers to ensure that banks meet their obligations.
However, cash machine operators have criticized the Treasury for not addressing funding challenges in the sector. Charlie Evans, sales director at NoteMachine, highlighted the financial pressures on the network due to reduced funding and rising interest rates.
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