You are here: Home - News -

Banks must provide free access to cash or face fines

by: Rebecca Goodman
  • 18/08/2023
  • 0
Banks must provide free access to cash or face fines
Banks and building societies that don’t provide free access to cash will face fines under a framework from the Treasury.

It will become a legal requirement for banks to provide free cash withdrawals and deposits within a three-mile radius of anyone living in a rural area. For those living in urban areas, it will be one mile.

If a banking service such as a branch or an ATM is closed, a replacement service also needs to be set up beforehand. The statement from the Treasury today also said that the regulator will need to consider factors such as opening hours, distance to cash services and the need for in-person assistance.

It comes as campaigners have been pushing for a commitment from the government and banks to ensure people still have free access to cash following the ongoing closure of bank branches across the UK.

The banks have been continually shutting branches, with almost 100 in a week recently flagged for closure, as they say there is a reduced demand for branches as more people choose online services.

The Treasury said that although online payments have risen to 85 per cent, from 45 per cent, in the last 10 years, largely because of the move to cashless payments in the coronavirus pandemic, cash still remains an integral part of many people’s lives.

The Financial Conduct Authority (FCA) has been given new powers by the Government to protect access to cash services. It will also be able to fine firms who don’t provide this. The framework published today has come about as part of the Government’s Financial Services and Markets Act 2023. Details about exactly how the one and three-mile distances will work have not yet been announced.

In recent years, several pilot schemes have been launched to make sure free access to cash is available including banking hubs.

Economic secretary to the Treasury, Andrew Griffith, said: “Whilst the growing choice and convenience of digital payments is great, cash has an important and continuing role to play. That’s why we are taking action to protect access to cash in law and laying out that this means fee-free withdrawals and the availability of cash facilities within a reasonable distance.”

Sleepwalking into a cashless society’

Natalie Ceeney, chair of Cash Access UK and the independent Access to Cash Review said: “Over the past decade we’ve been sleepwalking into a cashless society. Cash remains vital for millions of people and businesses, many of who are struggling as bank branches close and it becomes harder to access and deposit cash. Digital payments don’t work for everyone.

“The government’s new law has made it a legal requirement for the banking industry to protect the current levels of cash access and cash deposits, and to 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.

“Today’s announcement is very positive news for millions of people across the UK.”

Jenny Ross, editor of Which? Money, said: “Which? successfully led the campaign for laws to protect free access to cash for the millions of people across the country who rely on it, amid widespread bank branch and ATM closures in recent years.

“Now that it has passed new laws, the government must put in place measures which ensure those who want to withdraw or deposit cash are appropriately served in their local communities.

“The FCA must make use of its new powers to ensure banks meet their obligations and stand ready to direct them to address any gaps.”

Related Posts

There are 0 Comment(s)

Leave a Reply

You may also be interested in