FCA Seeks to Safeguard Consumers’ Access to Cash

The Financial Conduct Authority is pursuing the protection of consumer access to cash as bank branches and cash machines vanish. 

Banks will have to notify the regulator and customers if they plan to close branches or cash machines and must verify that they weighed the effect on consumer access to cash, according to rules proposed by the FCA.

The guidelines apply to regulated firms that manage (or have agents that manage) branches or cash machines. Banks, building societies and credit unions are included.

Under the newly drafted guidelines from the FCA, banks will also have to prove they have looked into other possible choices to support consumers who need to have access to cash in areas affected by bank closures.

Alternatives in lieu of branches could include mobile banking, cash delivery or free-to-use ATMs. The changes will need to be announced and clearly outlined to consumers at least three months in advance to allow customers time to take actions such as finding a new banking provider.

The guidelines by the FCA will ensure people can continue to withdraw and deposit cash and make cash or cheque payments for their usual living expenses. The guidelines are up for deliberation but could be imposed by the end of the year.

If a firm violates the terms of the guidelines, they will be at the mercy of enforcement action, including receiving fines. 

The FCA’s guidelines expect banks to treat customers fairly when deciding to close branches or cash machines and urges them to clearly communicate with customers in a timely manner. It is expected that customers are given enough time to make other arrangements for alternatives.

The guidance also calls for banks to carefully consider how closures will affect the community’s need for access to cash, including withdrawals and deposits. 

Not only should firms consider the effect of cash machines and branches disappearing, they should provide easy alternatives for customers including sharing services with other providers, providing mobile banking hubs or cash delivery, and supporting consumers using digital banking.

The FCA put forth the guidelines to help ensure local branches and free-to-use cash machines don’t disappear in the U.K. More than 3,500 U.K. branches have closed or scheduled to close since January 2015, The Guardian reported, and about 9,500 cash machines have closed in the past two years.  

Moreover, the COVID-19 pandemic has accelerated the switch to digital banking.

More people are turning to digital payments, as shops and customers opt for using cards over cash during the pandemic. Some claim that access to cash is important for small businesses, the elderly or people who cannot afford broadband for online banking. The closures of banks and cash machines may force them to be left behind. 

An FCA survey showed that one in 10 adults has said they would have trouble dealing with a cashless society, but that number rises to one in six for vulnerable customers.

“Access to cash is a priority for the FCA,” FCAs interim head of strategy and competition Sheldon Mills said. “While in the recent climate we have seen some consumers move to digital payments, we have also seen the importance of the continued availability of cash to many consumers, including those most vulnerable. Firms have managed access well through COVID-19, and we have seen many good examples of how they have used alternatives to branches and ATMs during the crisis. We expect them to build on this work and to continue to think about consumer needs as they take decisions on future closures.”

Do you prefer cards or cash? How would you cope in a cashless society? Let us know in the comments.

Read More Lawsuit & Settlement News:

Shaw Academy Facing Investigation, Calls for Refunds

FCA Toughens Rules on Payments Firms Following Wirecard Scandal

Group Litigation Accuses Nissan, Renault of Cheating Emissions Tests

Quiz Investigates Claims Supplier Paid Employees Only £3 an Hour