Banks issued stark warning as thousands of branch closures block access to cash

Barclays, HSBC, Lloyds and NatWest are among 14 of Britain's biggest lenders which now have to make sure people can access cash after a wave of branch and ATM closures. The Financial Conduct Authority (FCA) said on Wednesday (July 24) that designated banks and building societies will have to weigh up if communities lack access to cash services and plug any gaps.

The watchdog announced that from September 18 lenders will have to respond to local calls for them to assess any gaps in access to cash in a commnunity and keep branches and ATMs open until alternatives are made available. However, the FCA's powers don't extend to stopping local branches from closing.

Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said: "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.

"That’s why we’ve acted quickly in response to new powers given to us by Parliament to ensure reasonable access to cash withdrawal and deposits is maintained."

The move comes after concerns were raised about access to cash following a wave of branch closures. Some 1,358 bank and building society branches and 4,450 ATMs closed in the two years to June 2023, according to the FCA.

It said gaps in cash access could be plugged with measures, including banking hubs, ATMs which also take deposits and Post Office facilities.

The annual volume of cash payments fell by 65 percent in the UK between 2015 and 2021 due to an increase in digital payments, FCA figures show.

But households on an annual income of £15,000 or below with less access to digital payment methods rely most on cash, according to the watchdog.

The 14 designated banks and building societies are: Allied Irish Banks Group, Bank of Ireland, Bank of Scotland, Barclays, Clydesdale Bank, HSBC UK, Lloyds, NatWest, Nationwide, Northern Bank, Santander UK, The Co-Operative Bank, Royal Bank of Scotland and TSB. LINK Ltd and LINK Holdings are also subject to the new rules.

The new rules follow an FCA consultation on establishing a cash access regulatory regime last year. The watchdog said it has changed some rules consulted on, including extending the time banks have to carry out cash-access assessments. Local communities have also been granted more time to make their cases for keeping services.

Eric Leenders, Managing Director of Personal Finance at UK Finance, said although cash usage is declining, the industry knows it is still important for many businesses and consumers.

He added banks and building societies are committed to maintaining access for those who want it. Mr Leenders continued: "The measures announced by the Financial Conduct Authority build on the ongoing and successful rollout of shared banking hubs and industry investment in free ATMs and cashback without purchase. There is also the option to do day-to-day banking at Post Office branches.

"The FCA recently found that the vast majority of people have free access to cash locally and we will continue to work with the regulator and Government to make sure that this is maintained."

Ross Borkett, Banking Director at Post Office, said: "We are delighted to see the publication of the new access to cash regulations to give consumers and businesses more certainty around the future of cash in the UK.

"Post Office will continue to play its role at the heart of the nation’s cash infrastructure, with postmasters across the UK providing easy access to everyday banking within every community. The last few months have seen Post Office handle record amounts of cash for customers right across the UK."

Economic Secretary to the Treasury, Tulip Siddiq MP, said: "Cash continues to play a vital role in the lives of millions of people and businesses across the country, so I welcome the FCA's new rules.

"Our commitment to roll out 350 banking hubs will also help provide local communities with access to the critical banking services people rely on."