Financial Services and Markets Bill announced in the Queen's Speech with provisions to protect access to cash

The Financial Services and Markets Bill was announced in the Queen's Speech on 10 May 2022, one of 38 bills in the government's legislative programme for this Parliament¹. The Bill contains provisions to ensure people across the UK can continue to be able to access their own cash, as set out in the access to cash rules².

Under the Bill, the Financial Conduct Authority (FCA) would be granted new powers over the UK's largest banks and building societies to ensure cash withdrawal and deposit facilities are available in communities across the country². The government intends to appoint the FCA as the lead regulator for retail access to cash, responsible for monitoring coverage². HM Treasury would be able to specify geographic baselines for reasonable access to cash withdrawal and deposit facilities, with separate baselines possible for withdrawal and deposit facilities and for urban and rural areas². The largest banks and building societies would be classed as designated firms, considering market share by number of accounts and the value of deposits in those accounts².

The Bill followed a consultation process: the Access to Cash: Call for Evidence opened in October 2020, the Access to Cash: Consultation was published in July 2021 and closed in September 2021, and the Summary of Responses was published in May 2022². In April 2021, the government accepted an amendment to the Financial Services Bill (now Act) to allow consumers to access cashback without having to make a purchase².

The Finance Innovation Lab said the Bill's promised improvements on access to cash and fraud compensation were welcome but narrow, and that it had seen no indication the Bill would require vendors to accept cash¹. It also said the government removed the promised Sustainable Disclosure Requirements from the Bill days before it was announced, and that climate or net zero were not mentioned in relation to the Bill in the speech or supporting documents¹. The Treasury confirmed the Bill would update the objectives of the financial services regulators to ensure a greater focus on growth and international competitiveness¹; on 16 May, over 50 academics and policy experts published an open letter warning against asking regulators to champion competitiveness¹.

Why it matters for households

Cash remains the second most frequently used form of payment, second only to debit cards, and the Minister, John Glen MP, told the committee that 5.4 million people, or about 10% of adults in the UK, are reliant on cash². In 2009, 56% of transactions were in cash, but cash payments now represent only 17% of all transactions². The 2019 Access to Cash Review found that around 17% of the UK population, over 8 million adults, would struggle to cope in a cashless society².

Branch and ATM closures have been concentrated in particular areas. Since 2015, 53% of Scotland's bank branches have closed, the highest percentage loss of the four UK nations, according to Which?, and since 2018, 20% of Scotland's free-to-use ATMs have closed². Across the UK, banks and building societies have closed 6,871 branches since January 2015, at a rate of around 53 each month, representing 69% of the branches open at the start of 2015³.

The Bill's provisions would apply across the UK, with the FCA monitoring coverage and HM Treasury setting baselines². The specific geographic baselines have not been set; they would be informed by the FCA's monitoring and remain flexible to respond to changing cash demand over time². The Bill does not require shops to accept cash, according to the Finance Innovation Lab¹. The government responded in April 2022 to an e-petition asking to make it unlawful for shops to refuse cash payments, after it received almost 25,000 signatures².

What happens next

The government has promised more information on the Bill when it is introduced, which could be any time from this summer¹. The Scottish Affairs Committee said it looked forward to reviewing the more detailed proposed legislation when Parliamentary time allows². The committee also recommended that the government consider legislating in the Bill to mandate the membership of LINK for card issuers and ATM operators, and repeated its predecessor's recommendation that the government set up a working group with industry to introduce network-wide deposit-taking ATMs². The government has two months to respond to the committee's report, published on 11 July 2022².