London (Business Emerge), July 25: Starting September, new regulations will make it more challenging for banks in Britain to close branches. Banks must now demonstrate to regulators that local communities have alternative, free access to cash before they can shut down a branch.
The Financial Conduct Authority (FCA) released final “access to cash” regulations on Tuesday, responding to lawmakers’ concerns that branch closures adversely affect vulnerable individuals and residents in rural areas. These closures make it harder for people to access cash for everyday transactions.
Between 2021 and June 2023, a total of 1,358 bank and building society branches were closed, according to the FCA. The shift towards online banking and card payments has accelerated this trend. However, as Sheldon Mills, FCA’s executive director for consumers and competition, pointed out, “Three million people still depend on cash, and numerous small businesses require secure daily deposits.”
Legislation now grants the FCA authority to require banks to evaluate and address potential cash access shortages caused by branch closures. Banks must provide a free cash withdrawal service or establish a “hub” at local post offices in affected areas before shutting a branch. These hubs were previously part of a voluntary initiative, resulting in delays and only 67 of the proposed 146 hubs being operational.
The FCA’s revised approach aims to rectify these issues. Residents and businesses can also request assessments to identify cash access gaps caused by branch closures. While the FCA’s new powers won’t halt all branch closures, they will mitigate significant disruptions in local cash access, the FCA noted.