Andrew Barber: FCA’s new rules to ensure nationwide cash access
Consumer credit and payment services expert Andrew Barber discusses the FCA’s recent proposals to ensure public access to cash in the UK by requiring banks, building societies, and other businesses to maintain reasonable access to cash services.
Banks and building societies will be required to maintain “reasonable access to cash” under Financial Conduct Authority (FCA) proposals designed to ensure the public has access to cash in an increasingly digital world.
Under the new rules firms providing accounts to personal and business customers, such as banks and building societies, are required to maintain reasonable access to cash across the UK, while businesses involved in the supply of cash, such as the Post Office or operators of cashback, would also be bound by the new rules.
Despite just 14% of all UK payments in 2022 made by cash, according to the FCA, cash payments are heavily relied upon by small business and vulnerable groups.
The proposals aim to address the needs of vulnerable people in society, with these people protected from unreasonable costs due to the “new cost-efficient and effective cash solutions”.
Businesses subject to the rules would be required to perform local cash access assessments to check for cash deficiencies around the area, examining whether these deficiencies are likely to cause detriment to the local community.
Under the proposed rules, closure of local branches will require additional thought on the part of designated providers as branch closure is one of the triggers for an access to cash assessment. Businesses will also need to ensure they do not close cash facilities, such as bank branches, until any additional cash services identified are available.
When assessing possible detriment under the plans, businesses will need to look at the local demographics, the geography of the areas and any impacts the availability of cash may have on vulnerable customers. If any gaps are identified, businesses will need to ensure additional services are delivered, and if a deficiency with significant impact is identified, then solutions must be identified to address the access to cash need.
The proposals state that anyone with sufficient local interest - such as local community groups, businesses or residents - will be able to ask to see the access to cash assessments - an important feature that gives significant power to communities to trigger action.
Designated providers may be able to satisfy some requests through improving local knowledge of the facilities in the area, but it is likely that a number of assessments will be required at least in the early days of these rules if they are made.
While the new rules do not prevent institutions from closing local branches, they will impose additional requirements to meet before a decision to close a branch is made. These requirements include finding alternative cash services for local residents that would be impacted by such closure.
Businesses will have an initial 12 weeks to carry out any requests under these measures, with the FCA expecting a spike in requests at first. After this, firms, including banks, will need to respond within eight weeks of a request for assessment. Consultation on the FCA proposals is open until 8 February, with plans to finalise the new rules in the second half of 2024.
Andrew Barber is partner and consumer credit and payment services expert at Pinsent Masons