UK’s FCA proposes new rules to protect access to cash
The UK’s Financial Conduct Authority (FCA) has proposed a new set of rules to protect access to cash for consumers and businesses as digital payments continue to rise.
The FCA launches consultation on new rules to protect access to cash
In accordance with the new powers granted to the FCA by the Financial Services and Markets Act 2023, the regulator says that designated banks and building societies will need to assess the gaps in access to cash, taking local factors such as demographics and transport into consideration.
Designated firms will have to consider if additional services are required to meet local gaps and deliver additional cash services wherever gaps are identified. They will also be required to respond to requests from local residents, organisations and representatives to “consider, assess and plug gaps” and ensure they do not close cash facilities, including bank branches, until the additional cash services are made available.
According to data gathered by the FCA and the Payment Systems Regulator (PSR), as of Q1 2023, 95.1% of the UK population are within one mile of a free-to-use cash withdrawal point, such as cash machines or Post Office branches, while 99.7% of the UK population are within three miles.
“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. It’s important that we support consumers impacted by recent innovations,” comments Sheldon Mills, executive director of consumers and competition at the FCA.
“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.”
While the FCA’s new powers will not prevent bank branches from closing, it states that the rules “will have an impact where branches are a key local source of cash”.
“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,” the regulator adds.
The consultation paper applies to firms that provide current accounts to personal or business customers which are or will be designated by the UK government and businesses involved in the supply and operation of cash access services, but it is also open to feedback from consumers and their representatives.
The FCA is accepting feedback until 8 February, with plans to finalise the new rules by Q3 2024.
