FCA given new powers to protect access to cash
Summary
The Financial Services & Markets Act 2023 has granted the FCA new powers to help it maintain the reasonable provision of cash deposit and withdrawal services to UK consumers.
Following the Government’s recent Cash Access Policy Statement, Parliament has asked the FCA to ensure the reasonable provision of cash deposit and withdrawal services for UK personal and business current accounts. The FCA says it will now develop new rules to ensure that, as cash access services evolve, they continue to be provided on ‘a reasonable basis’.
The FCA’s current assessment is that, despite branch closures, access to cash remains generally good for most people. Last year, 95% of the UK population were within a mile of free-to-use cash withdrawal points such as ATMs, Post Office branches, or bank or building society branches, while 99.7% were within three miles of a free-to-use cash access point.
The volume of payments not involving cash has risen, from around 45% a decade ago, to 85% in 2021. Contactless payments, banking apps and mobile wallets are increasingly popular among consumers of all ages, who want convenience and a faster way to pay. The pandemic accelerated the move towards digital payments. In March 2023, contactless payments accounted for 61% of all credit card transactions and 75% of all debit card transactions.
But cash remains vital for some UK consumers, with 3.1 million adults (6%) using cash in most, if not all, of the transactions they made in the 12 months to May 2022. Cash is particularly important for consumers with vulnerable characteristics and for many small businesses.
The FCA says it recognises the need to manage the pace of change and will balance the needs of cash reliant consumers and small businesses, against the costs firms are likely to incur in meeting those needs, and the general consumer preference for digital payments. The regulator says it will consult on proposed new rules ‘in due course’.