HMT consultation on Access to Cash - Which? response

Summary

We welcome HMT proposals, but further progress is urgently required. We are pleased the consultation was published promptly and includes a commitment to legislate to protect access to cash. However, HMT needs to maintain the pace of its work to turn its proposals into legislative requirements to protect the cash network. The Government should set out an ambitious timetable for seeking parliamentary approval for legislation and implementing the requirements. Without urgent legislative action we are concerned that the cash infrastructure will decline rapidly, leaving behind many people who are currently not yet ready or able to use digital payment methods.

Geographical requirements represent the simplest way to ensure access to cash, but any system must meet consumer needs. We agree that setting geographic requirements represents the simplest approach to ensuring the availability of a minimum level of withdrawal and deposit facilities, and HMT’s starting point (90% of neighbourhoods within 1 kilometre of a free cash withdrawal outlet) is appropriate. However, we do not think adoption of a distance-based approach should be at the expense of delivering a system which meets consumer needs. We recommend that the geographic requirements act as a foundation upon which the FCA, as lead regulator, is empowered to determine what constitutes ‘reasonable access’ to take account of the range of factors which can affect consumers’ access to cash withdrawals and deposits. The FCA must also have the power to address ‘cold spots’ where local access to cash needs are unmet, even where geographical requirements are met at a national level.

Protections are required for the 10% who fall outside proposed requirements. There is currently no protection for people who fall outside HM Treasury’s proposal to guarantee access to cash withdrawal facilities, regardless of the difficulties they may face in accessing cash. We are concerned that these people are likely to be found disproportionately in more rural areas, including the devolved nations of the UK, where mobile and broadband connectivity issues mean that digital payment methods may not be available. HM Treasury needs to develop its understanding of this 10% (equivalent to approx. 6.7m people) to understand who they are and what harm they may experience in having to travel long distances to access cash. The Government has rightly concluded that access to cash requires legislative protection. Some form of protection should be extended to all consumers, not just the 90% who stand to benefit from the current proposals. Without this, there is a risk that access to cash for the 10% will deteriorate further as industry focuses on meeting the requirements mandated by legislation, ignoring the needs of the 10% and meaning that their access to cash becomes evermore difficult.

We support the FCA being appointed as the lead regulator for the cash network. In line with one of the key calls from our longstanding Freedom to Pay Campaign, we strongly support the FCA being given overall responsibility for managing the cash system with its remit and powers expanded to enable it to do this effectively. The appointment of a lead regulator will help ensure coordination of activity and increase levels of accountability, and the FCA is well-placed to perform this role due to its existing work on access to cash and its well-established oversight of much of the banking and payments industry. In this role, the FCA should have responsibility for:

• oversight of how access to cash geographic requirements are met, which should include determining what constitutes ‘reasonable access’ and intervening to address ‘cold spots’ where local access to cash needs are unmet, even where geographical requirements are met at a national level.
• monitoring cash acceptance and intervening where appropriate - there is no point in securing access to cash if it can't be spent. As the single regulator, the FCA needs to develop its understanding of the barriers to cash acceptance among retailers and to take action where it has powers to do so. An essential first step should be to track cash acceptance levels among retailers.

Consumers and communities should have a formal route to request access to cash. There is a need for a formal mechanism to allow consumers / communities to request additional cash access points to meet unmet local needs for cash, even where geographical requirements are met at a national level, and for the single regulator to be tasked with responding within appropriate timeframes.

Efforts to protect access to cash must be accompanied by coordinated activity to help more people make use of digital payments. While we want to ensure that those who rely on cash are looked after, we recognise that the trend is to digital payments which offer a range of benefits (e.g. security, convenience). So, alongside ensuring access to cash, a cross-Government focus should be on helping people to overcome barriers to enable them to make use of digital payments, and to foster innovations in digital payments which can meet the needs of those who may be reluctant to make use of existing digital payment methods. HMT should learn lessons from how the access to cash debate proceeded, in particular the need for some form of central oversight / coordination to ensure swift progress is made by the most efficient distribution of activity