New rules from the Financial Conduct Authority (FCA) aimed at protecting cash access have taken effect and are reportedly benefiting local communities, according to the regulator. This positive outlook comes despite the challenges posed by Lloyds Bank’s recent plan to close numerous branches.
Under the new regulations, banks and building societies are required to evaluate whether changes to local services, such as closing branches or ATMs, result in insufficient cash access for communities. Since the rules were established in July, Link, which manages the UK’s cash access network, has reassessed local needs in light of banking service changes.
As a result, 15 communities previously not identified as needing a banking hub will now receive one, and six will gain an ATM at their banking hub. Additionally, six areas will have access to an automated deposit service or an enhanced Post Office. Importantly, existing services will remain until replacement options are in place. This shift is attributed directly to the new FCA regulations, as stated by Sheldon Mills, the FCA’s executive director for consumers and competition.
Mills noted, “The way we spend money is changing, and far fewer of us use cash day-to-day. We don’t want to impede progress, but we aim to ensure reasonable access for those who still rely on cash. Our new rules are beginning to make a difference, safeguarding essential services for communities nationwide.”
However, the FCA’s optimistic perspective contrasts sharply with the realities facing high streets and the ongoing trend of major banks reducing their branch networks. Recently, Lloyds announced plans to close 292 branches across the UK by 2025. Since January 2015, banks have shut down 6,143 branches, a reduction of about 62%. In 2024, 410 closures are projected, followed by another 116 in 2025.
Mark Aldred, a retail banking expert at Auriga, argues that the new regulations fall short, stating that the banking hubs, including the 15 newly announced, do not serve as adequate replacements for the lost branches and offer limited services. He points out, “While there have been some improvements to the original proposals, there is still no significant incentive for banks to maintain physical cash access or to broaden the range of financial services in local communities.”
Aldred emphasizes that the number of upcoming hubs pales in comparison to the number of branch closures, and highlights the limitations of these hubs. For instance, many lack printing capabilities, preventing customers from obtaining paper statements and documents. Furthermore, there is no requirement for these hubs to feature a 24/7 ATM.
He concludes, “Simply having a hub on the high street isn’t sufficient. Customers are discovering that access to bank experts when needed is crucial, rather than being limited to scheduled availability. Like Post Office counters, hubs do not adequately replace the comprehensive branch banking services that communities have lost.”