The Financial Conduct Authority has been appointed with new powers to protect access to cash following the passing of a government bill.
Through the Financial Services & Markets Act 2023, Parliament has requested the FCA ensures reasonable provision of cash deposits and withdrawal services for personal and business current accounts in the UK.
The FCA announced that it intends for its approach to be “balanced”, to meet the needs of consumers and small businesses.
In line with the Treasury’s new policy, the FCA said it will seek to maintain a network of cash access facilities that is in keeping with the current distribution of services.
This will mean that people and businesses who remain reliant on cash are able to withdraw and deposit it.
It also announced it would consult on new rules in due course and ensure they work together with the authority’s existing branch closures guidance.
The authority acknowledged that its rules need to be “flexible” to the cash needs of personal customers and small and medium-sized enterprises.
It explained that the needs will vary according to the demographics of the local population, and characteristics of the area, such as digital connectivity, geography, and transport infrastructure.
The FCA also announced its intention to consult on rules that will require each of the banks and building societies subject to the new access to cash regime to conduct assessments.
These assessments would be of the reasonableness of cash provision when certain significant changes in local access occur or are proposed.
For example, this could include a decision to close a bank branch, the closure of a post office, or the removal of an independently operated ATM.
The FCA additionally stated that it expects to use its new powers to collect information from providers of cash access services and other entities involved in cash access services.
Next steps
Looking ahead, the announcement stated that the government will designate which firms the regulation of cash access will apply to and may designate co-ordination bodies.
However, before making any rules or general guidance, the FCA announced that it will undertake a full consultation, including a cost benefit analysis.
The authority will also be engaging with a variety of stakeholders including organisations representing cash users, banks and building societies, and providers of cash coordination infrastructure.
Depending on the outcome of the consultation, the FCA stated that it currently expects any new rules to take effect by summer 2024.
Research
This follows the publication of “Access to cash coverage in the UK 2022 Q2”, research conducted by the FCA on cash usage which was published in May 2022.
This research found that, as of Q2 2022, 95.1 per cent of the UK population are within one mile of a free-to-us cash withdrawal point, such as cash machines, Post Office branches or bank/ building society branches.
This rose to 99.7 per cent of the UK population for being within three miles of a free-to-use access point.
