Banks that do not stick to new access to cash rules could face a fine from the UK’s financial watchdog, the Treasury has warned.

On Friday the government body announced a new framework which states that the vast majority of people and businesses in the UK should be no further than three miles away from a location or machine where they can withdraw cash.

Under the new measures, the Financial Conduct Authority (FCA) has been given further powers to protect the provision of cash access services, including protecting cash access without any fees for those who hold personal current accounts.

The new rules also state that if a service is withdrawn and a replacement one is needed, that this should be put in place before the closure takes place.

Those that fail to meet these new requirements could face a penalty from the regulator.

The move comes amidst a wave of bank branch closures, including by Virgin Money which announced last month that it will be closing around 30 per cent of its network from October.

NatWest also recently announced plans to shutter a further 36 branches in 2023, bringing the total number of closures for the bank to 142.

The government said that while the vast majority of people living in urban areas can already access cash deposit and withdrawal services within one mile and those in rural areas from around three miles away, the new policy will “make clear that the FCA should use its powers to maintain this level of coverage”.

“Whilst the growing choice and convenience of digital payments is great, cash has an important and continuing role to play,” said Andrew Griffith, economic secretary to the Treasury. “That’s why we are taking action to protect access to cash in law and laying out that this means fee-free withdrawals and the availability of cash facilities within a reasonable distance.”

He continued: “People shouldn’t have to trek for hours to withdraw a tenner to put in someone’s birthday card – nor should businesses have to travel large distances to deposit cash takings.”

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