HM Treasury published the Summary of Responses to the Access to Cash Consultation

HM Treasury published the Summary of Responses to the Access to Cash Consultation in May 2022, which set out the Government's planned approach to legislating for access to cash¹. The consultation itself was published in July 2021, seeking views on legislative proposals to protect access to cash, and closed in September 2021¹. The Summary of Responses reviews the findings from that consultation and outlines plans for legislating in the Financial Services and Markets Bill¹.

As announced in the 2022 Queen's Speech, the Financial Services and Markets Bill contains provisions to ensure people across the UK can continue to be able to access their own cash¹. Under the Bill, the Financial Conduct Authority 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 country, and the Government intends to appoint the FCA as lead regulator for retail access to cash, responsible for monitoring coverage¹. The Government also intends to enable HM Treasury to specify geographic baselines for reasonable access to cash withdrawal and deposit facilities across the UK, with the baselines kept flexible to respond to changing cash demand over time¹. There may be separate baselines for withdrawal and deposit facilities, with distances to deposit facilities likely to be greater, and different baselines for urban and rural areas¹. HM Treasury would also have powers to designate firms to bring them in scope of the requirements, with the largest banks and building societies classed as designated firms by market share in number of accounts and value of deposits¹.

The Scottish Affairs Committee, publishing its report on 11 July 2022, said it welcomed the decision to legislate¹:

The report sets out the scale of change in cash and branch provision. 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 closed¹. The Minister, John Glen MP, told the Committee that in 2009, 56% of transactions were in cash, but cash payments now represent only 17% of all transactions¹. The Committee's public survey of people in Scotland received 225 responses; 48% said they "often" use cash to pay for goods and services, 15% "almost always", and only 4% never use cash¹. Asked about the UK becoming cashless, 67% said it would be "very negative" and only 6% said it would be "very positive"¹.

Separately, the Committee noted that in December 2021 the Cash Action Group announced that LINK would independently assess the needs of any community facing the closure of a core cash service, such as a bank branch or ATM, and that the Post Office would deliver enhanced cash services in up to 30 branches¹. The third instalment of the Post Office Banking Framework Agreement starts in January 2023, meaning consumers of 30 UK banks and building societies can continue to access cash and basic banking facilities via the Post Office until 2026¹.

Why it matters for households

The measures described would place duties over cash provision on the largest banks and building societies, with the FCA monitoring whether withdrawal and deposit facilities are available across communities¹. The geographic baselines that HM Treasury would set are not yet specified in the Summary of Responses; the Committee said the specific baselines will be informed by the FCA's monitoring, and that there may be different baselines for urban and rural areas and for withdrawal and deposit facilities¹. Until those baselines are set, the practical distance a household might be expected to travel for cash has not been reported.

The figures cited by the Committee describe who relies on cash now. Around 5.4 million adults in the UK, roughly 10% of adults, rely on cash to a great extent or very great extent in their daily lives, and LINK told the Committee that approximately 500,000 people in Scotland are dependent on cash, about 1 in 10¹. The 2019 Access to Cash Review found around 17% of the UK population, over 8 million adults, would struggle to cope in a cashless society¹. The Committee heard that closures can bear hardest in remote and rural areas; for customers of the closed Virgin Money branch in Portree the nearest alternative branch is 80 miles away including a ferry transfer, and for the closed Wick branch it is 101 miles away¹.

What happens next

The Financial Services and Markets Bill contains the provisions on cash access, and the Government intends to appoint the FCA as lead regulator and to give HM Treasury powers to set baselines and designate firms¹. The Committee said it looks forward to reviewing the more detailed proposed legislation when Parliamentary time allows¹. The Committee's report was published on 11 July 2022 and the Government has two months to respond¹. The Committee also recommended that the Government consider legislating in the Financial Services and Markets Bill to mandate the membership of LINK for card issuers and ATM operators, and repeated a predecessor Committee's recommendation that the Government set up a working group with industry to introduce network-wide deposit-taking ATMs¹.