The clock is ticking down to the FCA’s 8 February deadline for comments on the its access to cash consultation. The FCA has set out proposals for how it plans to support access to cash in an increasingly digital world.
Specifically, it is proposing a new regulatory regime. This would require banks and building societies to assess and fill gaps, or potential gaps, in cash access provision. This includes access to both notes and coins, and access free of charge for consumers with personal current accounts.
Mark Aldred, retail banking expert at Auriga, tells EPI the new rules proposed by the FCA are disappointing and need significant revision to have any real effect.
He says that in their current form, the new procedures merely rubber stamp what the banks have been doing already. That is, pushing through cuts to both access to cash and financial services nationwide.
“By the time these new rules come into effect in Q3 2024, hundreds more branches will have been shuttered. The FCA should be calling for a moratorium on closures now rather than give the banks the time to rush through their plans.
Taking each proposed rule one by one, the first to undertake cash access assessments must be strengthened to require the bank to be transparent in what that assessment finds.
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To date, the assessments have been vague and opaque.”
“FCA is missing the point-the gap being created is more than access to cash but also access to financial services-Aldred”
Aldred suggests that there is an argument that the bank is marking its own homework here. Should not an independent body, such as the FCA itself, be performing this assessment?
He adds: “The second rule to require banks to respond to customers and others on how the closure will create gaps in access is simply too weak. The FCA should be saying to banks they must proactively consult their customers about service requirements in their local community. And do so in way that provides adequate time for customers and local businesses to respond. This must be a meaningful consultation process. It should counter the impression that banks are all too ready to contact customers to invite them to go digital or paperless but never ask whether they would like to go branch-less or not.
Post office counters are not a like for like alternative to in-branch bank service
“On delivering reasonable cash access alternatives and not shutting branches until those alternatives are available again is too weak. The default on alternative cash access services is Post Office counters. These are not a like for like alternative to bank teller in-branch service. The current controversy involving the Post Office also may affect customers’ trust in using the service to withdraw or deposit their cash.
An alternative to the Post Office that has some industry support is the Share Banking Hub, even with its limited scope. While branch closures have been swiftly executed, the opening of hubs has been painfully slow. If the FCA wants to reassure the public, they should demand that no branch is closed until there is a hub or something better open to service that community. There is simply too long a lag between the need for hub being identified and its actual availability. The FCA has an opportunity to show its teeth on this issue. But, as presently constituted, its planned new rules are simply too weak to make a difference.”