The UK’s Financial Conduct Authority (FCA) has told banks considering closing either a branch or ATM that they will need to provide an analysis of the likely impact on customers’ access to cash.
The authority’s guidance – released this week following a consultation – comes amid ongoing concern about how society’s move away from using cash, accelerated by coronavirus, will impact those who prefer or need to use cash ahead of digital alternatives.
The FCA’s guidance, which applies from 21 September, says that banks, building societies and credit unions must keep the authority informed of any plans for closures or conversion of free-to-use ATM to pay-to-use in good time before making a decision. This will enable the FCA to ‘monitor whether customers are being treated fairly’.
The watchdog will expect firms to provide a ‘clear summary’ of their analysis of the needs of customers using the sites, the impact of the proposals on those customers, and alternatives that are, or could reasonably be, put in place if they implement the proposals. The authority also expects firms to consider how small- and medium-sized enterprises (SMEs) or micro-businesses will be affected by their proposals, ‘given the critical role of businesses in the cash cycle’.
If a firm decides to implement its closure or conversion proposals, it will be expected to ‘clearly communicate information about this to its customers no less than 12 weeks before the proposals are implemented’. This should include making customers aware of alternatives they can use. The FCA says this will give customers time to take action, such as changing banking provider.
‘Cash remains essential to many consumers’
“Although closures or conversions are decisions for firms to take, it is important they implement these decisions in ways that are fair to their customers. Even during the pandemic, cash remains essential to many consumers. This guidance sets out clearly our expectations on firms and will ensure that firms make it a priority that customers are treated fairly, especially those who are most vulnerable,” said the FCA’s interim executive director of strategy and competition, Sheldon Mills.
The UK’s Access to Cash Review, published in March 2019, found that around 17% of the UK population – more than eight million adults – would ‘struggle to cope’ in a cashless society. ‘For many people in the UK, using cash is not a matter of choice, but of necessity… digital payment options just don’t yet work for everyone’, the report said.
It is now six months since the government committed to “bring forward legislation to protect access to cash and ensure that the UK’s cash infrastructure is sustainable in the long-term”. The commitment, made in a section of its 2020 Budget on ‘Supporting the most vulnerable’, came just weeks after the Access to Cash Review panel published a one-year update, asserting that the UK’s cash system has “reached a tipping-point” and warning that it “will collapse without legislation”.
Government legislation ‘really needed now’
Natalie Ceeney, who chaired the Access to Cash Review, told Global Government Fintech this week: “Cash remains essential for millions of consumers, and particularly for the most vulnerable. Covid has accelerated the shift to digital, further threatening the existing cash infrastructure. The FCA’s intervention to slow the decline is helpful, but what’s really needed now is the promised government legislation to ensure that no one who needs it is left without cash.”
The FCA said it continues to work with the Payment Systems Regulator (PSR) to ensure an appropriate and sustainable model of maintaining access to cash.
‘Some respondents [to the FCA’s consultation] asked us to clarify how this guidance would interact with any potential future legislation on access to cash, given government’s stated intention in the Budget to introduce legislation to protect access to cash for those who need it,’ says the FCA in this week’s 19-page document. ‘This guidance is not intended to take the place of, or pre-judge, any legislation that government might introduce. We will review this guidance within 12 months, and that review will take account of any legislative or industry developments in that time. We are working closely with government to inform the design of any potential legislation.’