LONDON – Banks in Britain must comply with tougher rules from September that require them to delay branch closures until they can show regulators that local communities would still have free access to an alternative provider of cash.
The Financial Conduct Authority (FCA) published final “access to cash” rules on Tuesday after lawmaker concerns that vulnerable people, and those living in rural areas, face difficulties obtaining cash to pay for their shopping and services when a branch is shut.
In the two years to June 2023, 1,358 bank and building society branches have been shut, the FCA said, as many people bank online and use cards for payments.
“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,” Sheldon Mills, FCA executive director of consumers and competition, said in a statement.
Parliament has passed a law giving the FCA powers to mandate banks to assess potential cash gaps left behind by branch closures and to put in place an alternative service to withdraw cash free of charge for customers with a bank account before a branch can be shut.
Alternatives must include a free-to-use cash machine, or “hub” at post offices set up jointly by banks that have left a town or village.
Until now, the hubs were part of a voluntary scheme by banks, leading to delays in setting them up, with only 67 of 146 proposed hubs actually delivered.
“Our approach thus aims to address these shortcomings,” the FCA said.
Local residents and businesses can also request an assessment of whether there are gaps in local cash access if a branch is closed, the FCA said.
“The FCA’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,” the watchdog said.
Fourteen banks and building societies, including Barclays (NYSE: BCS), Lloyds (NYSE: LYG), HSBC (NYSE: HSBC), NatWest (NYSE: NWG), Nationwide Building Society, and Santander, must comply with the rules.
The Labour Party, now in government, said in June it would give regulators further powers to increase the number of banking hubs.
(Source: Reuters)
Edward Cooke is a financial analyst, freelance writer, and editor. He has six years of experience in financial journalism. He has an in-depth understanding of equities markets, tracking major indices and providing real-time analysis on stock price movements, corporate earnings, and market sentiment.
