Banks and building societies will need to weigh up if local communities lack access to cash services, like branches and ATMs, and plug significant gaps, under new rules from the Financial Conduct Authority (FCA).
Under the new rules banks will need to respond to local residents and community organisations when closing branches and ATMs and provide an assessment of whether there are gaps in local cash access. Where signifcant gaps are found, banks will be obliged to retain branches and ATMs until alternative solutions are found.
Sheldon Mills, executive director of consumers and competition at the FCA, says the regulator's powers won’t prevent the closure of bank branches - but will have an impact where branch closures leave significant gaps in local cash access.
“Three million people continue to rely on cash, even as digital payments become more popular. And many small businesses still need somewhere to safely deposit their takings each day.
“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.”
Since January 2015, banks and building societies have closed 6,058 branches, which represents about 61% of the branches that were open at the start of 2015. So far there have been 410 closures scheduled across 2024, and another 61 have been pencilled in for 2025.
Mills says gaps in cash access could be filled with a range of measures, including banking hubs, ATMs (including new deposit ATMs) and Post Office facilities.
Set for introduction next month, the rules will apply to 14 designated banks and building societies and include a number of changes from the FCA's initial access to cash consultation. These include extending the period for banks and building societies to carry out cash access assessments, giving local communities more time to make their case and the introduction of a two-year review period.
The proposals have been given a cautious welcome by consumer campaigning group Which?.
Rocio Concha, Which? director of policy and advocacy, states: "It's encouraging that the FCA is moving forward with this plan. It must now be prepared to closely monitor how banks and building societies are behaving and step in with enforcement action if they are falling short of what is needed to maintain cash access in communities.
"Industry initiatives such as banking hubs will likely be the future of banking in lieu of shuttered branches, but their rollout remains too slow for consumers to feel their benefit. The government must deliver its commitment to open at least 350 new hubs in the coming years - and revise that total upwards if necessary."