LONDON: Banks and building societies shutting branches will need to do more to make sure people can still access cash, under new rules being introduced by the UK’s financial watchdog.
The Financial Conduct Authority (FCA) said its plans will come into effect from September 18.The new powers will not prevent the closure of bank branches.Instead, it will require banks to make sure they are plugging significant gaps in local cash access.
The move comes as Britain’s high street lenders have shut thousands of branches across the UK in recent years, leaving many towns without any local branches.Consumer group Which? said in May that more than 6,000 bank branches had closed since 2015.
Major banks say that there are fewer customers who are using in-person services, with more people preferring to use mobile and online banking.But the FCA said its research found that three million people on average still rely on cash, with lower-income households disproportionately likely to be excluded from digital services and more reliant on cash.
“And many small businesses still need somewhere to safely deposit their takings each day,”said Sheldon Mills, the FCA’s executive director of consumers and competition. “That’s why we’ve acted quickly in response to new powers given to us by Parliament to ensure reasonable access to cash withdrawal and deposits is maintained.”
The FCA said its new rules will require banks and building societies to fill gaps in cash access with measures such as banking hubs, ATMs and Post Office facilities.Banking hubs allow staff from several banks to share the same space, helping to fill gaps left in the system from branch closures. They have a counter service operated by the Post Office, allowing customers to conduct routine banking transactions like withdrawing and depositing cash and paying in cheques. Banks will also need to assess the needs of local communities and make sure they are responding to residents and groups that raise concerns.
The rules go further than the current, industry-run, voluntary scheme. Meanwhile, prior to winning the General Election, Labour pledged to open 350 banking hubs in towns and villages across Britain over the next five years.