Financial Services and Markets Act 2023 receives royal assent

The Financial Services and Markets Bill gained royal assent in June 2023 to become the Financial Services and Markets Act 2023¹. The bill had been introduced in the House of Commons in July 2022¹. Its provisions include a requirement on HM Treasury to produce and keep under review a policy statement on cash deposit and withdrawal services, powers for HM Treasury to designate persons involved in providing those services, and regulatory functions for the Financial Conduct Authority (FCA) in relation to maintaining them¹. The act also gives the Bank of England powers to oversee the wholesale cash industry through a market oversight regime, under which the Bank could regulate the market activities of the industry¹.

At report stage in the House of Lords, the government introduced amendments requiring the FCA to seek to ensure "reasonable" provision of free cash access services for customers with current accounts, and requiring the government to include its policy on free cash access services for personal current accounts in its policy statement¹.

In accordance with section 54 of the 2023 act, HM Treasury published a policy statement on access to cash deposit and withdrawal services for personal and business current accounts across the UK in August 2023¹. The statement set out the government's minimum expectations for banks on access to these services¹. FCA analysis cited in it found that at least 95 percent of people in predominantly urban areas of the UK had access to cash deposit and withdrawal services within a mile of where they lived, and at least 95 percent of people in predominantly rural areas had access within three miles¹. The government said its aim was to ensure that coverage was maintained¹.

The statement said that any proposed alternative service, under FCA rules and guidance, must be established before any significant closure or change to an existing service¹. It also said the FCA would have power to fine banks and building societies that were not "keeping up to these standards"¹. The then economic secretary to the Treasury, Andrew Griffith, said:

The policy statement was welcomed by several organisations, though some wanted more detail on how the measures would be applied¹. Martin McTague, national chair of the Federation of Small Businesses, said his organisation "welcome[d] these plans in principle" but awaited further details on how aspects such as the three-mile rule would be implemented¹. Jenny Ross, editor of Which? Money, said it was "good to see the government moving quickly and issuing guidance for banks to follow", and that the FCA "must be ready to take strong action" against banking companies that "fall short of the required standards"¹. The shadow economic secretary to the Treasury, Tulip Siddiq, argued the statement was "not enough to protect in-person banking services for all communities"¹. Derek French, a former NatWest executive and campaigner on access to cash, described it as "very vague"¹.

Why it matters for households

The act and the policy statement sit alongside a long decline in branch numbers. Data from the British Banking Association from 1986 to 2012 and the Office for National Statistics from 2012 to 2023 show the number of bank branches in operation in the UK fell from 14,689 in 1986 to 5,745 in 2023, while building society branches fell from 6,954 to 1,925 over the same period¹. The government has said branch closure decisions are made by each bank's management on a "commercial basis", but has called for the impact to be "mitigated where possible"¹.

The provisions matter most to people who depend on in-person and cash services. A June 2023 Which? survey of 2,700 banking customers with a disability or impairment found 52 percent said they had been negatively impacted by bank closures; 35 percent found it fairly or very difficult to speak to their bank by phone, 21 percent struggled with security features such as card readers or remembering passwords, 13 percent reported problems with wheelchair access, 12 percent with accessible debit cards and 10 percent with hearing loops at their local branch¹. An Age UK survey of 2,632 people aged 65 and above, published in May 2023, found 39 percent of respondents with a bank account in Britain were not managing their money online, equivalent to 4.09 million people if extrapolated to the whole UK population, and 75 percent, equivalent to 7.86 million people, wanted to carry out at least one banking task in person at a branch, building society or post office¹.

For small businesses, the Federation of Small Businesses reported in April 2022 that four in 10 small high street businesses said cash was the main payment method among customers, with six in 10 needing to make regular cash deposits¹. The Rural Services Network argued in April 2023 that reducing branches made access harder for people in rural areas with poor broadband or mobile signal¹.

What happens next

The FCA published initial guidance in 2020 setting out its expectations for banks intending to close or reduce branches or free-to-use ATMs, and revised that guidance in 2022, saying some banking companies had "fallen short of expectations"¹. In December 2023 the FCA launched a consultation on a new regulatory regime intended to fill gaps in cash access provision¹. On 12 January 2024, Link recommended that 101 new banking hubs be established in the UK¹. The House of Lords was scheduled to consider a short debate on the impact of high street bank closures and the need for a national network of banking hubs on 25 January 2024¹.

More on access to cash, the access to cash rules and financial inclusion is available in the site's guides.