(Sharecast News) – The Financial Conduct Authority (FCA) has declared that certain banks and building societies will still need to hold cash despite the UK’s continuing shift to digital payments.
The new rules will ensure that the three million consumers who rely on cash still have access to physical payment methods.
The availability of cash access services – or lack thereof – can impact local communities, small businesses, economies and high streets, along with the wellbeing of many vulnerable people in society, the FCA said.
“Under the FCA’s proposals, designated banks and building societies will need to assess gaps in access to cash,” the FCA said in a statement on Thursday.
“These assessments need to take into account local factors such as demographics and transport. Where firms identify gaps, they will need to act to address these needs.”
At the end of the first quarter of 2023, some 95.1% of the UK population were within one mile of a free-to-use cash withdrawal point, while 99.7% were within three miles.
Under the FCA’s new rules, designated firms need to: undertake “cash access assessments” before changes are made to services; respond to requests from the community to assess and plug gaps; deliver “reasonable” additional cash services where there is a big access gap; and make sure they don’t close facilities until additional services are available.
However, the FCA cannot force companies like retailers to accept cash – it is still understood to be at the company’s discretion.
“The FCA’s new powers don’t prevent bank branches from closing. However, the rules will have an impact where branches are a key local source of cash. The FCA will ensure these rules work in harmony with its existing guidance on bank branch closures,” the FCA said.
The FCA is in a consultation period until 8 February, and will finalise its rules by the third quarter of 2024.