High street banks in the United Kingdom will have to ensure customers can find access to cash within three miles of their local communities, and those falling below the minimum service level will face a fine, the Rishi Sunak government has confirmed recently.
Amid the recent closure of thousands of local branches, as digital payment methods steadily become the new normal in the European country, the nation’s ministers are now looking forward to banks to help protect vulnerable groups and elderly customers by maintaining present levels of cash access across the United Kingdom.
“The vast majority of people are able to withdraw money within one mile, if they live in cities, and three miles if they live in rural areas,” the Treasury said, while adding that the service includes cash withdrawals through ATMs, bank branches and shops offering free cashback.
The Rishi Sunak government also said the country’s Financial Conduct Authority (FCA) would make sure banks and building societies were “keeping up to these standards – and have the power to fine them if they do not”.
Meanwhile, former UK Independence Party leader Nigel Farage went to Downing Street to hand in a petition that called on the Rishi Sunak government to crack down on businesses that have increasingly instituted card-only policies since the Covid crisis.
The petition submission was part of Farage’s latest campaign against banks and payment companies, after United Kingdom-based wealth management company Coutts threatened to close his accounts in 2023. The row snowballed in July after he obtained documents that showed his political views were part of the decision to shut his accounts.
The scandal resulted in the resignation of Alison Rose as chief executive of the bank’s owner, NatWest Group, apart from the ouster of Coutts’ CEO Peter Flavel. Farage informed the media that since the incident, the bank had offered to keep his accounts open.
The latest United Kingdom announcement on ‘access to cash’ builds on the wide-ranging ‘Financial Services and Markets Act 2000’, which gave consumers a legal right to access cash and handed enforcement authority to the FCA.
Andrew Griffiths, the economic secretary to the Treasury and “City minister”, told the Guardian, “People shouldn’t have to trek for hours to withdraw a tenner to put in someone’s birthday card – nor should businesses have to travel large distances to deposit cash takings.”
“These are measures which benefit everyone who uses cash but particularly those living in rural areas, the elderly and those with disabilities,” the official added further.
The Treasury has also hinted about ‘concessions’ to the ‘three-mile guarantee’ while stating that the FCA should “maintain this level of coverage, while recognising that needs may differ by location and change over time.”
And while personal banking customers will be guaranteed fee-free cash access, the same clause may not be applied to businesses in some areas of the United Kingdom.
The FCA is expected to launch its consultation by 2024, meaning that the laws may not come into force until summer 2024.
The latest government initiative is seen as a victory for the campaigners, who have long warned that the United Kingdom’s dwindling cash facilities, after swathes of ATM and bank closures, are putting not-so-tech-savvy elderly and vulnerable people at risk.
Access to cash has also become more important during online outages, a phenomenon that blocks card transactions and digital money transfers. As per the Treasury, about 5.4 million British adults use and rely on cash daily.
Natalie Ceeney, chair of the independent Access to Cash Review, told the Guardian, “Over the past decade, we’ve been sleepwalking into a cashless society. But digital payments don’t work for everyone.”
“Cash remains vital for millions of people and businesses, many of whom are struggling as bank branches close and it becomes harder to access and deposit cash,” she stated further, while adding that the latest cash access distance guidelines would help “support the specific needs of different communities”.
“That doesn’t mean that nothing will change, but it does mean that where services plan to close, there need to be appropriate alternatives in place before they do so. Positively, the banking industry is ahead of the curve in helping to create new banking hubs and deposit services in communities,” the official remarked further.
The banking lobby group UK Finance, while reacting to the news, said, “We support the work the government and FCA are doing here and look forward to reviewing the government’s full policy statement when published.”