Sunday, March 3, 2024

Efforts to preserve access to cash could go further, says FSB

Proposals from the Financial Conduct Authority to protect and widen access to cash are a good start, but could go further, according to the Federation of Small Businesses.

That’s the FSB view in a response to theFCA’s consultation on access to cash, which closed yesterday.

Martin McTague, FSB’s National Chair, said: “A small business must be free to choose which payment options it wishes to accept, including cash. To enable this, it’s vital for the infrastructure required for cash to remain available in all areas.

“Cash access is too important to be left to innumerable individual commercial decisions which, taken together, represent a significant threat to people and businesses’ ability to withdraw, process and deposit cash.

“The FCA’s consultation rightly recognises this – it’s a good start, but could go further. We’re concerned that the FCA’s proposals won’t be enough to pause the trend seen in recent years towards fewer free cashpoints and bank branches.

“Cash is vital as a competitor to other forms of payment, and as a payment option when digital systems go down, or in areas with poor reception. Many vulnerable groups, from elderly people to those fleeing domestic violence, rely on being able to use cash, and it is also a key payment method for many visitors to the UK who are wary of high bank fees when paying by card.

“Now is the time for the FCA to shore up and defend a flexible payments ecosystem which can not only support small businesses and vulnerable communities with cash, but can also help to prepare the infrastructure for a diverse range of payment options including a digital currency.

“The proposals should look to the future, too. Banking hubs and other solutions to access to cash may well also be the best opportunities for building digital currency infrastructure in the future.

“As a country, we need a flexible and diverse payments ecosystem that is ready for changing consumer behaviour and needs.

“The FCA should work with the Treasury to safeguard the cash ecosystem, taking a more holistic and comprehensive view of the issue. Now is the time to be ambitious, in order to build the payments infrastructure needed by small businesses and consumers now and into the future.”

The FCA was given the task in the Financial Services and Markets Act from last year of “seeking to ensure reasonable provision” of cash deposit and withdrawal facilities, for business and personal customers.

The FCA’s proposals include:

  • Developing a more comprehensive cash assessment process that is more responsive to a wider range of local needs
  • Publishing assessment outcomes and making processes transparent
  • Responding to a wider range of trigger events to undertake a cash assessment in a local area
  • Meeting set timeframes for delivery of additional cash access services identified by cash access assessments. This will prevent unreasonable delays, reducing the cost burden on consumers and businesses that can arise from limited access to cash in their local area.

To strengthen the FCA’s proposals, FSB is calling for:

  • The FCA to broaden its focus beyond ATMs to include comprehensive support for cash deposit services and face-to-face assistance
  • FCA powers to be leveraged to expedite the development of banking hubs, ensuring they include SME banking and deposit services. Despite the partnership with cashpoint provider LINK identifying the need for over a hundred hubs, progress has been slow, with only 33 opened so far
  • Efforts to maintain consumer cash withdrawal access to consider as well the necessity of local cash management infrastructure for SMEs to offer cash payment options. Cash infrastructure should be considered a public good, meaning that concerns about competition sensitivities do not fully apply. Banks must be held to higher standards when considering the impact of their closures on access to cash.


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