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6 things you need to know about new bill to protect cash access and scam victims

The Financial Services and Markets Bill could come into force from next year

Measures to reimburse scam victims and protect access to cash have been unveiled by the government, in the first draft of the new Financial Services and Markets bill. 

First announced in the Queen’s Speech in May, the bill aims to ‘strengthen the United Kingdom’s financial services industry, ensuring that it continues to act in the interest of all people and communities', which could mean improved rights for consumers.

Here, Which? rounds up six ways the legislation could affect you or your finances when it comes into force. 

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1. Protected access to cash

The bill will ensure people can continue to conveniently withdraw and deposit cash, and the cash provision will be regulated by the Financial Conduct Authority (FCA).

This follows a longstanding campaign by Which?, after tracking bank branch closures for the past seven years. 

Our recent analysis found almost half of the UK’s bank branch network has closed since 2015.

Since the legislation was announced in the Queen’s Speech in May, branch closure announcements have come thick and fast, with a further 146 earmarked for closure since the speech. 

Link, the UK’s largest cash machine network, estimates 5.4m people still rely on cash.

To make sure these people can still access cash, the FCA will be given new powers to enforce this and could stop banks and building societies from closing cash access services if there was no suitable alternative. 

Further details such as the criteria for cash provision and geographic distances will be set out by the Treasury in a policy statement. 

2. Scam victims will be reimbursed   

The bill also includes measures to better protect scam victims, by making sure they are reimbursed if they are tricked into transferring money to a fraudster (known as an APP scam).  

Which? has been campaigning for the government to stamp out scams since 2015; and in January this year, we reiterated our call for stronger protections for fraud victims after finding more than £700,000 is lost to bank transfer scams every day.  

Currently, many banks have signed up to a voluntary reimbursement code to repay no-fault bank transfer scam victims, but they can face a lottery depending who they bank with, and there are concerns about it being applied inconsistently or victims being unfairly blamed.

The new bill will allow the Payment Service Regulator to use its existing powers to require firms to reimburse victims of APP scams. 

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3. Stablecoins will be regulated 

Regulation is set to be introduced for certain types of stablecoins, paving the way for them to be used as a form of payment in the UK. 

A stablecoin is a cryptocurrency with a value that's fixed to another asset, often currencies. 

This means the cryptocoin tracks the underlying asset, making its value stable over time. This is in contrast to other cryptocurrencies, such as Bitcoin and Ethereum, which tend to be much more volatile. 

Newly-appointed Chancellor Nadhim Zahawi said the framework ‘reinforces the UK’s position as a leading centre for technology as we safely adopt crypto assets.’

4.  Credit Unions to offer wider range of products

Credit unions are small financial cooperatives, owned by their members. There are more than 500 credit unions in Britain, so almost everyone has access to one - but there may be restrictions on which ones you can join, as members tend to have to have something in common, such as their profession.

Credit unions are governed under the Credit Unions Act 1979, but restrictions mean they primarily offer savings accounts and loans to their members. 

This is set to change under the new bill, which will allow credit unions to offer a wider range of products, such as car finance and insurance policies with partner insurance firms. 

These additional services would be subject to credit unions obtaining permission from the FCA to carry out any regulated activity. 

5. Remaining EU law to be repealed

The bill is also set to repeal hundreds of pieces of EU legislation left after the UK’s exit from the EU. 

The government said leaving some EU legislation in place had provided stability after the EU exit, but was never intended as a long-term solution and has led to a ‘complicated patchwork of regulatory requirements'. 

The Chancellor said the bill would ‘seize on the benefits of Brexit to ensure the financial sector works in the interests of British people and business’. 

6. New ‘rule review’ power

A new ‘rule review’ power is included in the bill, which will allow ministers to direct regulators - including the Bank of England - to review their rules, where it is in the public interest. 

While regulators could be made to re-examine their decisions, ministers will not be allowed to overrule them. 

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When will the bill become law?

The bill was published on 20 July and is due to have its second reading in the House of Commons on 7 September.

The second reading is the first chance MPs have to debate the main principles of the legislation. 

Once the second reading is complete, the bill will proceed to committee stage - where each clause (part) and any amendments (proposals for change) to the bill may be debated.

After a third reading, it will then have to pass over to the House of Lords for approval, before being given Royal Assent. 

With this in mind, it is anticipated the bill will not come into force until next year, presuming it clears all parliamentary hurdles. 

‘Which? will scrutinise legislation closely’

Which? will scrutinise the legislation closely in the coming weeks to ensure that adequate consumer protections are in place.

Rocio Concha, Which? Director of Policy and Advocacy, says: ‘It's good to see the government moving quickly on this important legislation, which will pave the way for protection of access to cash for millions of people who rely on it and give reassurance to consumers that they will have greater protection against suffering significant losses if they fall victim to a bank transfer scam.’