Financial Regulator Proposes Rules to Maintain Cash Access and Delay Cashless Society
The Financial Conduct Authority (FCA) has launched a consultation on Thursday to introduce rules aimed at preserving cash access and slowing down the transition to a cashless society. Under the proposed regulations, banks and building societies will be required to assess cash access when making changes to their services, respond to requests from local residents and organizations, fill gaps in cash access, and wait until replacement services are available before closing cash facilities.
Supporting Consumers and Small Businesses
Sheldon Mills, the FCA’s executive director of consumers and competition, emphasized the importance of supporting consumers impacted by the increasing shift to digital payments. He stated that while digital payments are becoming more prevalent, over 3 million consumers, particularly vulnerable individuals and small businesses, still rely on cash. The proposed rules aim to ensure that these individuals can continue to access cash when needed.
Maintaining Cash Provision
The FCA has been tasked with creating new rules to maintain cash access following the enactment of the Financial Services and Markets Act 2023. The regulator previously reported that access to cash was generally good for most people, with 95.1 percent of the population able to find a cash machine, bank, or other cash services within a mile of their home. Additionally, 99.7 percent of the population could access cash services within three miles. These proportions remained unchanged during the first quarter of this year.
The consultation paper identifies key providers of cash access services, including bank and building society branches, ATMs, post offices, cashback at the checkout, banking hubs, and cash collection and delivery services. While there has been a decline in the number of cash points over the years, with 4,701 removed between March 2020 and March 2022, cash coverage across the UK as a whole has remained consistent.
The Importance of Cash for Vulnerable Consumers
Cash access points and reliance on cash have been steadily decreasing, but it remains a vital payment method for many consumers in the UK, especially those with vulnerable characteristics. According to the FCA’s latest Financial Lives Survey, an estimated 3.1 million UK adults, or 6 percent, used cash for most or all of their transactions in the year ending May 2022. This proportion rises to 9 percent for individuals with characteristics of vulnerability.
The FCA’s Access to Cash Review revealed that three-quarters of the UK population believe that a cashless society would make it harder for older people to manage their finances. The review also found that 26 percent of the population is digitally excluded, and a significant percentage of individuals with poor health or low household income rely on cash for their transactions.
By introducing these proposed rules, the FCA aims to manage the pace of change and ensure that individuals who still rely on cash can continue to access it when necessary. The consultation process will allow stakeholders to provide feedback and contribute to shaping the final regulations.
