Access to cash and banking services remain vital for many consumers and businesses. Our Financial Lives Survey in 2020 found that 5 million adults use cash for most of their purchases. The pandemic has led to more people becoming familiar with contactless card payments and internet shopping. The overall decline in the use of cash makes it more expensive to maintain the existing infrastructure that supports it. However, as we move out of the pandemic, cash continues to serve a socially useful purpose for many communities. Following a fall in ATM withdrawals of 40% year-on-year across 2020, withdrawals have started to increase again since restrictions have begun to ease.

Although our data shows that most people can access cash easily now, there is a need to maintain access to cash and banking services for those that still need it, particularly vulnerable consumers. At the same time, a critical part of maintaining this access will be supporting others that can to transition to digital and other alternative ways of banking and making payments.

This challenge requires industry, government and regulators to act. We are monitoring trends and supervising firms to make sure access is available and we will use the tools at our disposal to ensure this happens. We expect individual firms to protect the ability of their customers to access cash and other services that meet their needs when they close branches. We welcome the industry’s proposal to work together to protect access and develop long term solutions, while ensuring they comply with competition law. We support the government’s commitment to protect access to cash through legislation and we will have a role in supervising that legislation.

Cash must remain available

Cash use is declining but remains an important way many people and businesses buy and sell their day-to-day goods. The Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) are committed to ensuring that cash, and the infrastructure that supports it, remains available for those who need it. This includes new and innovative ways for accessing cash, such as banking hubs that are being piloted, alongside more traditional routes of bank branches, ATMs, cashback from retailers and cash services over Post Office counters.

What the FCA and PSR have done about cash

During the pandemic, the FCA and PSR worked with industry to address the challenges of ensuring cash access for the people who want to use it. This included analysing data, sharing best practice, and agreeing actions to ensure continued access to cash. As a result, even at the height of the crisis no more than 0.1% of the UK population lost access to a source of cash within 3 miles.

The FCA and PSR partnered with the University of Bristol last year to produce a comprehensive assessment of cash access across the UK. We found that 95% of people are able to access cash in urban areas within 650 metres and in rural areas within 3.5km. Bank branches, ATMs and Post Offices all form part of this important infrastructure. Under the Post Office national access criteria, 99% of the population must live in areas within 3 miles of their nearest Post Office, and 90% within 1 mile. In addition, the PSR’s oversight of LINK ensures that LINK continues to maintain a broad geographic footprint of free-to-use ATMs.

In September 2020, the FCA published guidance setting out expectation that firms should consider the impact of branch and ATM closures on their customers’ everyday banking needs and consider the availability and provision of alternatives. We have been supervising branch closures closely, assessing plans based on risk of harm posed to consumers. In January 2021, we asked banks to pause closures where they are unable to meet the expectations laid out in the guidance due to the coronavirus lockdown.

Legislation to protect cash

Last year, the government announced its intention to legislate to maintain access to cash in the long-term. That legislation will support infrastructure into the future and provide a framework to protect access to cash.

Our expectations of firms

We expect individual firms to play their part in protecting the ability of customers to access cash and wider banking services in ways that meet their needs, particularly vulnerable customers and SMEs.

Individual firms are responsible for making sure that when they close a branch or ATM in a local area, there are alternatives available to provide services at a standard of service that meets the needs of the customers using that branch or ATM. Firms will need to consider the ability to withdraw and deposit cash, safety, accessibility and opening times.

To meet these responsibilities, over the short-term firms are likely to rely on the current alternatives to branches to a large extent, such as Post Office and LINK services. We think there can be significant benefits from making the most of, and where necessary enhancing the existing services and policies. Over the longer-term there will also be scope for firms to use other alternatives and innovations.

Industry activity and regulatory expectations

We welcome the commitment from industry to take forward action to protect access to cash and close gaps in provision in a way that complies with competition law. This work should also take account of regulatory and legislative developments and does not replace the individual responsibilities of firms.

We also welcome the wider financial services industry actions to identify new ways to support local community access. Innovative new methods are already being piloted across the country and we are keen to see the outcomes of this work and how these solutions can be applied more widely.

The FCA and PSR will continue to work in an open and transparent way with consumer bodies and the firms we regulate to achieve our desired outcomes, including using the full range of regulatory tools available to us where appropriate.

Following on from our work with the University of Bristol last year, we intend to publish an updated assessment of the UK’s cash infrastructure in the summer, alongside the FCA’s recent consumer research into cash use. Furthermore, the PSR will shortly publish its review of Specific Direction 8 (SD8).