The Financial Conduct Authority (FCA) is to be granted new powers over the UK’s largest banks and building societies, to ensure that cash withdrawal and deposit facilities are available in communities across the country.
The move is part of the UK Government's pledge, announced in the Queen's Speech earlier this month, to ensure the continued availability of withdrawal and deposit facilities across the UK, and that the country’s cash infrastructure is sustainable for the long term.
The FCA’s new powers will allow it to address cash access issues at both a national and local level. As part of this, the Government will set out its expectations for a reasonable distance for people to travel when depositing and withdrawing cash.
Sarah Coles at Hargeaves Lansdown says a great deal hinges on what the FCA decides is a reasonable distance. When it checked in mid-2021, the regulator looked at access to cash within 1km, 2km and 5km. It found that the vast majority of people were within 1km of free access to cash (87%), and 95% were within 2km.
"This is an incredibly difficult call," says Coles. "Given that the five million adults who rely on cash include the most vulnerable groups, there’s a real risk that an awful lot of them will struggle to cover a four kilometre round trip each time they need money - especially if they don’t have transport and have mobility issues. If the FCA protects access to cash within two kilometres, it begs the question as to whether this actually offers all the protection that really vulnerable people really need.”
With more banks pulling away from the high street in favour of mobile and online banking, the availability of access to cash has become a political hot potato.
Economic Secretary John Glen says: "I want to make sure that people are still able to use cash as part of their daily lives, and it’s crucial to ensure that no person nor community across the UK is left behind as we embrace a more digital world."
To help further alleviate the problems, the Government passed legislation to enable the widespread adoption of cashback without a purchase as part of the Financial Services Act 2021.
And last month the government announced its intention to legislate to provide the Bank of England with the powers necessary to ensure the UK’s wholesale cash infrastructure - which includes the network of cash centres integral to the sorting, storing and distribution of notes and coin - remains effective and resilient.