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17 Feb 2020

Finance industry to help communities trial ways to boost access to cash

Will this be enough to halt the collapse of UK-wide access to cash?

The financial services industry has stepped in to fund a pilot scheme to help local communities find ways to get better access to cash after pressure from Which? to tackle 'cash deserts'.

But even if the pilot is successful and is rolled out further, we believe this move alone does not go far enough to allow everybody to get access to cash for as long as they need.

Unless the government responds to our call to introduce a new law in March's Budget to protect access to cash, we are warning that the UK's cash payments system will collapse within two years.

Here, we examine how the newly announced Community Access to Cash Pilots will work, why it's unlikely to be enough on its own and what else can be done to secure continuing cash availability.

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How the trials could help

The finance industry is stepping in to tackle so-called 'cash deserts' created after swingeing cuts to bank branches and the rapid rate of free cash machine closures.

It plans to bring back access to cash to areas where people have to travel miles in order to find an ATM or branch.

Which? research has found the trend has hit rural and deprived parts of the UK the hardest.

Communities will be asked to volunteer to take part in the pilots. Successful applicants, which could be individuals or local organisations, will work with payments experts.

The aim is to create new ways to tackle the issue, which might include:

  • helping local shops to give cashback
  • supporting groups to become more comfortable making digital payments
  • developing solutions to help small businesses continue to bank cash.

Results from the pilot scheme could help inform measures elsewhere.

Natalie Ceeney, chair of the Community Access to Cash Pilots (CACP), said: 'We are very keen to hear from local communities and work with them to identify solutions, acting as a test bed for the type of measures that could be rolled out more widely.'

You can find out more about the trials on the community access to cash pilots website.

What pilot schemes will be chosen?

The CACP expects to support between five and 20 communities this year as they trial pilot schemes. The number will reflect the size and complexity of the schemes.

The aim is to develop successful schemes that can be extended nationally.

Communities have until 1 May to submit proposals to CACP, which will choose what to assist and by how much.

Its board is equally composed of representatives from banks and customer bodies. They come from Barclays, RBS, Sainsbury's and Santander, the Federation of Small Businesses and consumer bodies Fairer Finance and Access to Cash Review.

Stephen Jones, chief executive of UK Finance, said:'There is no “one-size-fits-all” approach to achieve this and so understanding the needs of local communities is critical.

'That is why we are supporting the Community Access to Cash Pilots initiative as an additional industry measure to improve access, helping local areas develop and support solutions that work best for them.'

Communities will be able to find out which proposals get the green light from the CACP website.

Why is the industry stepping in now?

Banks have been saving hundreds of millions of pounds axing the number of free-to-use cash machines and chopping their branch networks.

But following the findings of the 2019 Access to Cash Review, which showed that as much as 17% of the UK population rely on cash, the banks have been forced to confront the impact on communities.

The Community Access to Cash Pilots is one of several initiatives being taken in response to the review's findings.

Ms Ceeney, who also chaired the Access to Cash Review, said: 'This is an important part of the wider work to ensure communities around the UK retain access to cash where it is most needed.

'With the UK becoming an increasingly cashless society, we need to make sure that digital payments work for everyone, but we also need to support communities who rely on cash, so that no one gets left behind.'

Will this be enough to save access to cash?

While we have yet to see the result of the pilot schemes, we believe only a change in the law will stop cash being put out of thousands of people's reach.

Which? Money editor, Jenny Ross, said: 'Millions of people are at risk of being cut off from the cash they need to pay for vital goods and services, and while industry-led initiatives are encouraging, they are not enough to stem the tide of bank branch and cash machine closures in the long run.

'Without urgent action, the UK's cash payments system could collapse within two years. That is why the government must use the Budget to intervene with legislation that protects free access to cash for as long as it is needed.'

Request a free local ATM using our tool

This pilot scheme follows hot on the heels of the 'request an ATM' tool designed by Link, the cash machine operator, which enables struggling communities to ask for a cash dispenser directly.

Since launching in October, seven new ATMs have been installed and are operating, and nine are scheduled to go live in the coming weeks.

As part of our Freedom To Pay campaign, we're working with Link to help you request new cash machines in areas where there is currently no free access to cash.