Banks and building societies will be required to assess local communities’ access to cash services, such as branches and ATMs, and address any significant gaps under new regulations from the Financial Conduct Authority (FCA).
These new rules mandate that banks respond to local residents and community organizations when shutting down branches and ATMs. They must conduct an evaluation to determine whether there are inadequacies in local cash access. If significant gaps are identified, these financial institutions must keep their branches and ATMs operational until alternative solutions are implemented.
Sheldon Mills, executive director of consumers and competition at the FCA, noted that while the regulator cannot prevent bank branch closures, it will take action when such closures create notable gaps in cash accessibility. “Three million people still rely on cash, even as digital payments gain popularity. Additionally, many small businesses require a secure location for daily deposits,” he emphasized. “That’s why we’ve acted swiftly, leveraging new powers granted by Parliament to ensure reasonable access to cash for withdrawals and deposits.”
Since January 2015, approximately 6,058 bank branches have closed, accounting for about 61% of the branches operating at the beginning of that year. For 2024, 410 branch closures are already planned, with an additional 61 expected in 2025.
Mills suggested that cash access gaps can be addressed through various methods, including the establishment of banking hubs, additional ATMs (including new deposit ATMs), and the utilization of Post Office facilities.
Set to take effect next month, these regulations will impact 14 designated banks and building societies and will include several changes based on the FCA’s initial consultation about cash access. These changes comprise an extension of the period allocated for banks and building societies to conduct cash access assessments, granting local communities more time to voice their concerns, and introducing a two-year review period.
Consumer advocacy group Which? has offered a cautious endorsement of the proposals. Rocio Concha, director of policy and advocacy at Which?, remarked, “It’s encouraging that the FCA is moving forward with this plan. They must closely monitor the actions of banks and building societies and take enforcement action if they do not uphold the necessary standards for maintaining cash access in communities.”
Concha added that while initiatives like banking hubs may represent the future of banking in light of branch closures, their implementation has been too slow for consumers to experience their benefits. She urged the government to fulfill its promise to establish at least 350 new hubs in the coming years, suggesting that this target should be revised upwards if necessary.