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17 Feb 2021

All eight banks respond to call from Which? on cash access - is it enough?

Varying timeframes of commitments to two vital industry cash schemes underlines urgent need for government action

The UK's largest retail banks have made public commitments to protect the cash network, as the need for legislation becomes urgent.

Anabel Hoult, Which? chief executive, wrote to each of the banks outlining the fragile state of the cash ecosystem and asked them to make a pledge to help maintain cash access.

While all the banks responded positively, the varying timeframes of their commitment underline the critical need for government action.

In last year's Budget, legislation was announced to protect cash for consumers, but there's still no timetable in place for its introduction. Urgent action is required to ensure the long-term future of the cash system in the UK.

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What did we ask banks to do?

Which? wrote to the banks asking them to guarantee continued membership of schemes managed by Link, the UK's largest cash machine network, and the Post Office, which are critical to protecting the current provision for cash withdrawal until legislation is introduced.

Reassuringly, banks pointed to the importance of safeguarding the cash network for cash-dependent customers. There was general agreement that both Link and the Post Office have a crucial role to play in the short to medium-term future.

However, all of the responses stopped short of explicitly committing to either scheme until legislation is introduced. This is largely due to the lack of clarity on the timing of the government's plans.

What did the banks say?

  • Barclays said it committed to the existing Post Office Banking Framework and the Link scheme, until the end of 2022, when it believes there is a reasonable expectation that legislation on cash access will be in place.
  • HSBC noted that it was in negotiations for extending the Post Office Banking Framework, which banks are signed up to until the end of next year. It made no reference to the Link scheme.
  • Lloyds Banking Group(which includes Halifax) said it was in negotiations with the Post Office about continuing membership of its scheme, and added that it had no current plans to leave Link, stating that it believes the focus should remain on the Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR) agreeing on a long-term solution for maintaining UK cash access.
  • Nationwide said it supports the call from Which? in the near term to commit to Link and the existing Post Office framework until legislation is introduced. Although it can't make an open-ended promise, it is willing to commit to continuing its existing arrangements with Link and the Post Office on the expectation that legislation will be introduced sometime this year.
  • NatWest Group stated both the Post Office and Link schemes are key to maintaining and evolving the UK's cash model, and said it will continue its close partnership to work with the Post Office to 'improve and evolve' the service provided under its Banking Framework.
  • Santander said it will continue to be a member of these schemes, as well as continue to support wider industry activity to protect the UK's cash system.
  • TSB said it had no plans to change its relationships with the Post Office and Link, and confirmed it was committed to the schemes.

What does this mean for the cash network?

It's encouraging that some banks have made commitments until they expect legislation to pass. However, without clear direction from the government on the future of cash, it is unclear what will happen if timetables exceed banks' expectations.

Which? is concerned that banks are unable to commit to anything beyond their existing agreements and is calling on the government to urgently set out a roadmap for protecting access to cash for those who depend on it.

There is a risk that if this roadmap isn't set out as soon as possible, irreversible damage could be done to the UK's cash infrastructure in the interim.

If even one bank was to withdraw support from either Link or the Post Office, with the latter's agreement with banks ending at the end of next year, widespread cash access will no longer be viable.

Why does this matter?

Recent research from Which? shows that there are two and a half million people in the UK who are reliant on cash to pay for essential products. A further seven million people say they would struggle without cash.

Despite the fact that 10 million aren't ready to lose access to cash, the cash network continues to shrink.

Since the start of 2020, 3,300 free-to-use cash machines have closed across the UK, with 431 banks closing over the same period, at the rate of a bank a day.

The overall number of ATMs in the UK has fallen by almost 20% in the past three years from 67,300 to 54,400. The number of bank branches has fallen by 40% - from 9,900 to 6,000 - since 2015.

While a Post Office is not a perfect substitute for a bank, it can offer essential cash services in communities that have no other means of access.

What happens next?

The pandemic has piled further pressure on the UK's cash infrastructure, which has been hit by a sharp decline in businesses accepting cash and the closure of thousands of ATMs and bank branches over the past 12 months.

Which? is now urging the government to publish its vision for the future of cash. The government must work with industry and regulators to set out the steps that will be taken to develop and introduce legislation at the earliest opportunity.

As part of this, the government must also give the FCA the responsibility to oversee the protection of cash in the UK to ensure that it remains a viable payment option for as long as it's needed.

Anabel Hoult, Which? chief executive, said: 'The rapid shift to a cashless society threatens to cut off access to those who depend on cash to pay for essential products and services.

'It's reassuring that all the major banks have reiterated their commitment to protecting cash for these customers, but without a clear indication of when legislation will be introduced, there remains significant uncertainty for what this might mean in the not too distant future.

'The government must set out a roadmap for legislation at the earliest opportunity to ensure that cash remains a viable payment method for as long as it is needed.'

Find out more:Budget 2021 - what will it include?