The United Kingdom’s Financial Conduct Authority (FCA) is taking steps to ensure folks maintain access to physical currency in an increasingly digital society. The agency proposed new rules to maintain reasonable access to cash for personal and business customers across the UK. This follows new powers granted to the FCA by the Financial Services and Markets Act 2023.
Under the FCA’s proposals, designated banks and building societies will need to assess gaps in access to cash. These assessments need to take into account local factors such as demographics and transport. Where firms identify gaps, they will need to act to address these needs.
“We know that, while there is an increasing shift to digital payments, over three million consumers still rely on cash – particularly people who may be vulnerable – as well as many small businesses,” FCA Executive Director of Consumers and Competition Sheldon Mills said. “It’s important that we support consumers impacted by recent innovations.
“These proposals set out how banks and building societies will need to assess and plug gaps in local cash provision. This will help manage the pace of change and ensure that people can continue to access cash if they need it.”
As of Q1 2023, 95.1% of the UK population live within one mile of a free-to-use cash withdrawal point, such as cash machines or Post Office branches. Virtually all, 99.7%, of the population are within three miles. However, the FCA said that the availability of cash access services can impact local communities, economies and high streets, and so it’s important to meet local needs – which may change over time.
Under the proposals, designated firms will be required to undertake cash access assessments when changes are being made to cash access services – to understand whether additional services are required to meet local gaps. They must also respond to requests from local residents, community organizations, and representatives to consider, assess and plug gaps.
These firms must also deliver “reasonable additional cash services” to fill gaps in provision where assessments show that there is or will be a significant local gap. Finally, they must ensure they do not close cash facilities, including bank branches, until any additional cash services identified are available.
The FCA said its new powers don’t prevent bank branches from closing but acknowledged the rules will have an impact where branches are a key local source of cash. In a statement, the FCA will ensure these rules work in harmony with its existing guidance on bank branch closures. Existing law allows retailers to decide whether to accept cash or not – so the FCA cannot require them to do so.
Consultations are open until Feb. 8. The FCA said it expects to finalize the rules by this summer.