FCA Proposes New Rules for Access to Cash

The Financial Conduct Authority (FCA) has set out its plans for a new regulatory regime for businesses involved in the supply of cash access services and operation of cash access facilities in England and Wales to ensure consumers can maintain access to cash.

Under the FCA’s plans, designated banks and building societies, the Post Office, and operators of payment systems through which cashback is provided would be required to assess and fill gaps in cash access provision that significantly impact personal customers and small and medium-sized enterprises (SMEs).

The assessments will consider local factors such as demographics and transport. Where firms identify gaps, they will need to act to address these needs.

The proposals follow new powers granted to the FCA by the Financial Services and Markets Act 2023.

Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said: “We know that, while there is an increasing shift to digital payments, over three 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.”

Under the proposals, designated firms will be required to:

  • Undertake cash access assessments when changes are being made to cash access services – to understand whether additional services are required to meet local gaps.
  • Respond to requests from local residents, community organisations, and representatives to consider, assess and plug gaps.
  • Deliver reasonable additional cash services to fill gaps in provision where assessments show that there is or will be a significant local gap.
  • Ensure they do not close cash facilities, including bank branches until any additional cash services identified are available.

The FCA’s new powers cannot prevent bank branches from closing. However, the rules will have an impact where branches are a key local source of cash.

The FCA will ensure these rules work in harmony with its existing guidance on bank branch closures. Existing law allows retailers to decide whether to accept cash or not, so the FCA cannot require them to do so.

At the start of 2023, 95.1% of the UK population were within one mile of a free-to-use cash withdrawal point, such as cash machines or Post Office branches, and 99.7% of the UK population were within three miles.

The FCA’s consultation closes on 8 February 2024 and hopes to finalise the new rules by next Autumn.

Read the full consultation document here.

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