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ATM charges hitting the poor

19 July 2006  |  6181 views  |  0 ATM

The poorest people in the UK and those living in remote rural communities are being hit the hardest by cash machine charges, with many areas becoming "free ATM deserts", according to research released by national charity Citizens Advice.

The charity says many customers in poorer areas are forced to use fee-charging cash machines because banks have closed branches and removed free-to-use ATMs. Its research has identified over a hundred "free cash machine deserts" in the UK.

The report says that fee-charging ATMs have a disproportionate impact on people on low incomes and those claiming benefits, which are now paid directly into bank accounts. The government introduced direct payment of benefits into bank accounts as a cost-saving measure, but this cost is now passed on to customers withdrawing benefits from fee-charging machines, says Citizens Advice. The average cost per withdrawal is £1.50, but some machines charge as much as £3.00.

In 1999 virtually all ATMs in the UK were free, but of the 58,000 cash machines now operating, 40% charge a fee regardless of the size of withdrawal.

David Harker, chief executive of Citizens Advice, says: "People on low incomes need to take out small amounts of money and more frequently, but they should not be penalised as a result. Rural communities are amongst the worst affected, where people may have to travel miles to the nearest free cash machine or pay a high charge."

Citizens Advice says its research also found that some hospitals only have fee-charging ATMs so patients have to pay to withdraw money, and fee-charging units are increasingly prevalent on university campuses.

The charity says a survey of 265 cash machines showed that the quality of signage at many fee-charging ATM was poor. Almost all (99%) people who responded to an online survey said they were aware that there are fee-charging ATMs, but nearly half said that they were not warned in advance that they would be charged for a withdrawal.

Furthermore, the bureaux survey revealed that a significant proportion of ATMs were not yet fully complying with the Link codes concerning signage. The research found that 41% of fee-charging machines did not have a sign saying they were fee-charging, 11% of units did not have an on-screen warning, while 23% had "poor signage".

The charity is asking banks and ATM operators for a guarantee not to further reduce the number of free cash machines in deprived areas and to improve signage on fee-charging machines.

In response to the report, HSBC says it will invest £50 million in installing new fee-free cash machines in at least 10% of the country's "free ATM deserts". The bank will add 500 free machines to its 2,900-strong UK ATM network over the next few years, some of which will be located inside telephone boxes.

The group is also recommending that government bodies - such as the Department for Work and Pensions, Department for Communities and Local Government, Scottish Executive and Welsh Assembly - work with local authorities to encourage them to secure the siting of free ATMs on local authority property used by the public.

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