Through the Financial Services & Markets Act 2023, the UK Parliament has asked the Financial Conduct Authority (FCA) to seek to ensure reasonable provision of cash deposit and withdrawal services for personal and business current accounts in the UK or part of the UK.

Following the Cash Access Policy Statement published by the Government, the FCA will develop new rules to ensure that as cash access services evolve they continue to be provided on a reasonable basis.

Over the past few years, the FCA has been carefully monitoring access to cash. Its current assessment is that, despite branch closures, for most people, access to cash is generally good.

As of Q2 2022, 95.1% of the UK population are within 1 mile of a free-to-use cash withdrawal point, such as cash machines, Post Office branches or bank/building society branches, and 99.7% of the UK population are within 3 miles of a free-to-use cash access point.

Nevertheless, the FCA recognises that the shape of branch networks is changing rapidly, as the way we pay adapts too.

The volume of payments that do not involve cash in the UK has risen from around 45% a decade ago, to 85% as of 2021. This change is being driven by technological advances. For example, contactless payments, banking apps and mobile wallets are increasingly popular amongst consumers of all ages, who want a faster way to pay and the convenience of not carrying cash.

In March 2023, contactless payments accounted for 61% of all credit card and 75% of all debit card transactions.

However, while digital payments make life easier for many, cash is still vital for some consumers in the UK with 3.1 million adults (6%) using cash to pay for everything or most things in the 12 months up to May 2022. Cash remains particularly important for consumers with vulnerable characteristics and many small businesses. The FCA recognises therefore that if the pace of change is not managed sensibly, those customers reliant on cash could be significantly affected.

The FCA says its approach will be balanced, considering the cash needs of consumers and small businesses, and the costs for firms to meet those needs and the general consumer preference for digital ways to pay.

In line with HMT’s new policy statement, the FCA will seek to maintain a network of cash access facilities that is in keeping with the current distribution of services so that people and businesses who remain reliant on cash are able to withdraw and deposit it. The FCA will consult on new rules in due course and ensure they work together with its existing branch closures guidance.

The regulator expects to propose rules that focus designated firms’ efforts in local areas where deficiencies in cash access would be likely to have a significant impact, taking into account a number of factors.

The FCA also expects to use its new powers to collect information from providers of cash access services and other entities involved in cash access services, for example the Post Office and providers of ATMs.

The FCA does not have powers to ask retailers to accept cash as payment for goods or services. Retailers are free under the existing law to decide whether or not to accept cash or to only accept digital payments.