FCA consultation on new rules to maintain access to cash in increasingly digital world.
New regulatory regime to require banks/building societies designated by UK GVT to assess/fill gaps in cash access provision significantly impacting consumers/businesses.
Follows FCA tasked by UKP with seeking to ensure reasonable provision of cash deposit and withdrawal services for personal and business current accounts across the UK.
To include free of charge access to notes/coins by consumers with current accounts.
UK PSR said it welcomed publication of the FCA's consultation paper on access to cash.
Proposals
Designated banks and building societies will need to assess gaps in access to cash.
These assessments need to take into account local factors such as demographics and transport and, where firms identify gaps, they will need to act to address these needs.
The FCA’s new powers do not prevent bank branches from closing; however, the rules will have an impact where branches are a crucial local source of cash.
FCA will ensure rules work in harmony with existing guidance on bank branch closures.
Consultation includes Technical Annex on cash coverage in the UK at a national level.
Data collected from banks, building societies, the Post Office and LINK alongside data on demographics and socioeconomic characteristics; FCA methodology, assumptions and the main empirical results which have generated FCA's four archetypes.
Access to Cash Data
On same day, UK FCA issued overview of geographical cash access coverage in UK at end of Q4 of 2022 and Q1 of 2023; this is part of the FCA’s work on access to cash.
The UK FCA also issued technical report by London School of Economic entitled costs to consumers and SMEs of a loss of access to in-person cash and banking services.
Effectiveness
Consultation is open until Feb. 8, 2024; FCA expects to finalize rules by Q3 of 2024.
Dec. 12, 2023 Letter to UKP
On Dec. 12, 2023, UKP issued letter from FCA dated Dec, 7, 2023 on the proposals.
Document dated Dec. 12, 2023, received from UKP Dec. 20, summarized on Dec. 22.
Following feedback, the FCA has made changes to the rules it consulted on, including extending period for banks and building societies to carry out cash assessments.
This will give local communities more time to make their case, also banks/building societies will be able to review the provision of identified cash services after two years.
The rules aim to address cash access needs of consumers and businesses in local communities by requiring designated firms to assess and plug gaps in local provision.
14 banks and building societies are designated to deliver the cash access system.
The final rules are made by the Access to Cash Sourcebook Instrument 2024 (FCA 2024/26) which amends FCA HB, updates the Glossary, amends FEES 4.2.7E.
After feedback, FCA is providing an 8-week implementation period between issue of policy statement and rules coming into force to give designated entities enough time.
The rules therefore come into force on Sep. 18, 2024, a change in publication date required FCA to amend rules commencement date set out in instrument FCA 2024/26.
Change via Access to Cash Sourcebook (Amendment) Instrument 2024 (FCA 2024/27).
Where firms have already announced closures of cash access services taking place before rules in force, these will not be subject to the new regulatory regime, but firms should not rush through closures before Sep. 18, must provide the required notice.
FCA also published research on who relies on cash, found to be those in low-income households (under £15,000 a year) and having low digital capability or access.
The regulator also published access to cash coverage figures for Q2 2023.
Jul. 26, 2024 Handbook Notice 121
On Jul. 26, 2024, UK FCA issued Handbook Notice 121 summarizing above changes.
Instrument, as amended by the Access to Cash Sourcebook (Amendment) Instrument 2024, in force on Sep. 18, 2024; feedback published in policy statement above.
