The Financial Conduct Authority (FCA) has announced new regulations aimed at preserving access to cash for UK communities affected by bank branch closures.
Starting 18 September, 14 of Britain's largest banks and building societies, including HSBC, Barclays, and NatWest, will be required to assess the impact of branch closures on local communities and ensure alternative cash services are available before shutting down locations.
The move comes in response to concerns about the rapid decline of physical banking services across the UK. In the two years leading up to June 2023, 1,358 bank and building society branches and 4,450 ATMs were closed, according to FCA data. This trend has left many vulnerable customers and businesses struggling to access cash and banking services.
While the new rules won't prevent branch closures outright, they will require banks to maintain existing facilities until suitable alternatives are in place. These could include free-to-use cash machines or banking "hubs" at post offices.
Sheldon Mills, executive director of consumers and competition at the FCA, stated, "Three million people continue to rely on cash, even as digital payments become more popular. And many small businesses still need somewhere to safely deposit their takings each day."
The regulator's research shows that around 6 per cent of UK adults used cash for most or all transactions in the year to May 2022, rising to 9 per cent among vulnerable groups such as those with low incomes or limited digital access.
The banking industry had previously established a voluntary initiative to maintain cash access, but delays in implementation led to some communities being without services for over a year. The new FCA rules aim to address these shortcomings and ensure more timely solutions.
Local residents and businesses will also have the right to request assessments of cash access gaps in their areas following branch closures.
While digital payments have surged in recent years, with cash payments falling by 65 per cent between 2015 and 2021, the FCA emphasises the continued importance of preserving access to physical currency for those who depend on it.
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