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Access to cash has become a perennial problem in rural communities. Bank branches are closing because of a general move towards online banking, but poor internet connectivity and other demographic factors have left people living in the countryside the least well-equipped to capitalise on this advancing technology. As we reported in April, the All-Party Parliamentary Group for Rural Business and the Rural Powerhouse found the resulting lack of cash access to be a key driver of the ‘rural premium’ that sees the countryside hit hardest by escalating costs of living.
Today (Friday 18 August, 2023) the Treasury has acted to prevent further loss of service, publishing a statement on access to cash as it was required to do under financial services legislation passed earlier this year. In the statement, the Treasury assesses that:
“The vast majority of people in predominately rural areas of the UK have access to cash deposit and cash withdrawal services within a maximum of 3 miles of where they live”.
It goes on to say that the Financial Conduct Authority (FCA) will be required to monitor these levels of access with a view to protecting it at current levels.
The statement does not offer hope of immediate improvement in cash access, nor of arresting branch closures directly. It does, however, introduce new expectations on banks when they are considering closing a branch.
The FCA will be empowered to require banks to assess the local impact of any closure on businesses’ and individuals’ ability to access cash, taking into account factors such as what alternatives are already available, their hours of availability, transport facilities and demographics. Where a significant impact is identified, banks will need to provide an alternative that must be available before the closure takes place.
Crucially for businesses that need to be able to deposit takings, the statement gives equal weight to deposits and withdrawals. Installing a basic ATM somewhere nearby will not be sufficient. It also makes clear that any replacement services must be free of charge. While no new prohibitions are planned on pay-to-use services, banks will not be able to rely on them to discharge their duty to maintain free access.
It is of the utmost importance to rural communities that the FCA uses these powers effectively, assessing banks’ compliance and holding them to account. For our part the Countryside Alliance will continue to monitor cash accessibility and its impact on rural communities.