The financial regulator has launched a consultation on Thursday on rules aimed at maintaining cash access and to delay the arrival of a so-called cashless society.
Under the rules proposed by the Financial Conduct Authority (FCA), designated firms, such as banks and building societies will be required to make assessments on cash access when making changes to their services; respond to requests from local residents and organisations; fill gaps in cash access where there is or will be a significant local gap; and wait until replacement services are available before closing cash facilities.
Launching the consultation, Sheldon Mills, the FCA’s executive director of consumers and competition, said: ‘We know that, while there is an increasing shift to digital payments, over 3 million consumers still rely on cash—particularly people who may be vulnerable—as well as many small businesses. It’s important that we support consumers impacted by recent innovations.
“These proposals set out how banks and building societies will need to assess and plug gaps in local cash provision. This will help manage the pace of change and ensure that people can continue to access cash if they need it,” he said.
The FCA has been tasked by ministers with making new rules to maintain the level of cash access after the Financial Services and Markets Act 2023 was enacted this year.
The regulator has previously said that access to cash had been “generally good” for most people in the second quarter last year, with 95.1 percent of the population able to find a cash machine, bank, or other cash services within a mile of their home, and 99.7 percent of the population able to access cash services within three miles.
The proportions remained unchanged during the first quarter this year, according to the FCA.
According to the consultation paper, key providers of cash access services include bank and building society branches, ATMs, post offices, cashback at the checkout, banking hubs, and other types of provision such as cash collection and delivery services.
While 4,701 cash points were removed in the two years to March this year, including 1,391 bank branches and 3,537 ATMs, “cash coverage across the UK as a whole has remained broadly consistent,” the paper said.
Cash access points, as well as reliance on cash, has been declining steadily over the years, but cash “remains a vital payment method for many consumers in the UK, particularly those with vulnerable characteristics.”
The FCA’s latest Financial Lives Survey (FLS) found that an estimated 3.1 million UK adults, or 6 percent used cash to pay for everything or most things in the year ending May 2022, and the proportion rises to 9 percent for those who had one or more characteristics of vulnerability, such as those in poor health or financial difficulty, or just being older.
The regulator’s Access to Cash Review found that three-quarters of the UK population believed a cashless society would make it harder for older people to pay bills or do other everyday things.
It has also found that over a quarter (26 percent) are digitally excluded, 15 percent of people with poor health, and 14 percent of those with a household income less than £15,000 use cash to pay for everything or most things.
