Campaigners are calling on the Government to introduce legislation safeguarding access to cash withdrawals on the high street. They fear that unless it acts quickly, swathes of the country will be left with no access as yet more bank branches and fee-free cash machines are culled in response to the pandemic.
On Friday, Natalie Ceeney, author of an authoritative report into access to cash 20 months ago, told The Mail on Sunday that the high street is at a financial tipping point.
If legislation was introduced promptly, she says it could be ‘transformative’, providing consumers and businesses with exciting new ways to access and deposit cash – through community banks, free cashback services at small shops and nationwide cash deposit schemes.
Warning: Natalie Ceeney, author of an authoritative report into access to cash 20 months ago, says that the high street is at a financial tipping point
‘The mood music for legislation is right,’ she adds. ‘The result could be better cash access in a more sustainable way.’ But if the Government dithers, she warns the consequences for high streets up and down the country will be dire. ‘Local communities would die,’ she says.
Ceeney’s ground-breaking report in March last year warned that eight million people would struggle to cope in a cashless society. Before the pandemic struck, three out of every ten purchases were made by cash. But the figure could shrink to one in ten within 15 years.
Ceeney is not a lone voice. Other consumer groups and campaigners are equally keen for the Government to intervene. David Fagleman, a director at financial consultancy Enryo, believes that accepting cash payments should be ‘mandatory’ for businesses providing essentials such as food and medicine.
The call for intervention comes as the Government is about to shut the door on a ‘call for evidence’ from consumer and business groups on how access to cash can be protected. This closes on November 25. It is then expected ministers will introduce legislation in the new year although the pandemic could push this back.
The Government has already laid out some plans. It is keen for retailers to offer customers cashback facilities without shoppers having to make a purchase – as is the requirement now.
This would be possible once the transition period with the EU ends on December 31 because it is Brussels rules that determine how cashback services are currently provided.
Come January, these rules could be scrapped, preparing the way for greater provision of cashback facilities. Recycling cash in local communities in such a way would reduce the need for businesses to bank deposits – increasingly difficult as branches are either closed or their opening hours restricted – while providing consumers with a convenient way to obtain cash.
It would also mitigate the impact of bank branch and cash machine closures. Branches are shutting at an average of 55 a month while more than 3,000 free-to-use cash machines have been removed this year.
Although wider cashback provision would be welcomed by campaigners, it is only part of the access to cash jigsaw. Ceeney believes more needs to be done. In the submission to the Government in recent days, she called for additional measures.
Key is a legislative requirement placed on banks to provide adequate cash services in communities – both consumer access to cash and cash deposit services for small businesses.
As part of this, she says communities should be able to have additional banking services – for example, a free-to-use cash machine – with their request heard by an independent organisation appointed by the regulator.
This body would have the power to instruct banks to provide a service where it is obvious cash access is an issue.
The legislation, adds Ceeney, should be overseen by one regulator – the Financial Conduct Authority (FCA) – rather than the current patchwork of regulators.
Other ideas include greater promotion of free-to-use cash services. This could be through an app enabling consumers to locate the nearest free-to-use cash access point; operators of fee-charging cash machines being required to show where to find the nearest free alternative; and clear branding for cashback services.
Ceeney says banks should also be required to fund the installation of automated deposit machines in supermarkets and post offices. Without regulatory intervention, she fears more businesses will decide not to accept cash. Ceeney is currently overseeing the piloting of various cash sustainability initiatives in work funded by the banking industry.
These include Post Office banking hubs and shared bank branches. She hopes any legislation will allow these ideas to become part of the new financial high street.
GOVERNMENT: WE WILL PROTECT NOTES AND COINS
John Glen, Economic Secretary to the Treasury, says: ‘In recent years, we’ve seen rapid changes in the way we pay for goods. People are increasingly choosing cards or innovative payment methods like e-wallets – made possible by advances in technology and regulation.
‘Cash use is declining, but millions still rely on it. There are many reasons: for some, cash is a key budgeting tool; for others, it is more accessible than digital payments – or a sign of independence. It is vital that these people – many being elderly or vulnerable – are not left behind by a shift to new payment methods.
‘The Government is working hard to protect access to cash for the people and businesses that need it. We promised to legislate in this year’s Budget and we will deliver. Work is going on now to develop new rules that will shape the future of cash. We want to harness the same creative thinking that has driven innovation in digital payments to maintain the UK’s cash system.
‘That’s why we are looking at how we can make cashback without a purchase widely available, so people could get cash from retailers in their local community without having to buy anything. And we’re seeking views on giving one regulator overall responsibility for the parts of the cash system used by consumers and small businesses, a role the Financial Conduct Authority could take on.
‘Protecting access to cash presents complex economic challenges – but it remains a key Government priority. With new legislation in the pipeline, and innovative community cash pilots underway across the UK, we will make sure that people who need to use cash are not left behind.’
John Howells, chief executive of cash machine network Link, says he would be disappointed if the Government’s legislative response was centred on wider use of cashback.
On Friday, he told The Mail on Sunday: ‘Any legislation must be focused on meeting the banking needs of communities – and not give the banks a further excuse to shut yet more branches.
‘Banks must be required to provide access to cash in a way that meets the needs of individual communities.
‘Need should be determined by the communities, not by the banks.
WHAT THE EXPERTS SAY
THE CONSUMER GROUP
Gareth Shaw, head of money at Which?, says: ‘Coronavirus has pushed an already fragile cash system to the brink of collapse. Proposals such as cashback without purchase have the potential to make a significant difference in communities that have seen their access to cash cut by widespread closures to ATMs and bank branches.
‘But they must be part of a wider strategy.
‘Legislation to protect cash access must be introduced urgently, while the FCA should take responsibility for the retail cash system.
‘The regulator must closely monitor cash acceptance alongside its work overseeing access, as protecting the provision of cash will be severely undermined if there is nowhere to spend it.’
JEFF PRESTRIDGE: THEY’D BETTER BE TELLING THE TRUTH
Despite Rishi Sunak’s overworked magic money tree, the coronavirus continues to do untold damage to our economy.
According to the Bank of England, the economy is likely to shrink 11 per cent this year with unemployment heading towards 2.6million by the time the New Year is waved in. It’s all very gloomy – and I can find no cheer to counter it. My apologies.
Coronavirus and lockdown are also changing the way we go about our everyday life. Unless we are careful, I fear that some things we take as givens – and cherish – will be gone for ever. Communities are being dismembered at a frightening rate as shops and pubs close – and we increasingly conduct our lives from a computer in our homes.
Cash could also become a victim of this societal change as we shop more online and are pushed towards contactless payment whenever we dare venture out to buy a newspaper or a pint of milk.
While some readers may not lament the loss of cash, others rely on it. It’s why we passionately believe that the Government must legislate to ensure cash remains a payment option for those who prefer to use it. Nothing else will suffice.
Caroline Abrahams, director of Age UK, says: ‘We have heard many times over the last few months how cash is an essential part of older people’s lives.
‘It helps them budget effectively if they’re on a tight income, pay back a carer or friend who does their shopping, and is an essential backup if they’re not online or live in an area with poor connectivity.
‘As bank branches close and cash machines disappear, cash is harder to access. We are hurtling towards a cashless society without enough consideration for the many people who will be left behind. Making sure older people have the coins and banknotes they need to keep spending is surely in the best interests of businesses and the economy too.
‘In terms of legislation, the creation of a universal service obligation – a requirement for banks to ensure cash access across the whole country – would be a great starting point.’
David Fagleman, director of financial consultancy Enryo, says: ‘Our research shows that 72 per cent of consumers think the move to a cashless society is happening too fast. It also indicates that 81 per cent think a range of payment options, including cash, should always be available in shops.
‘Worryingly for retailers, over a quarter of people say they will no longer shop in places that decide to stop accepting cash. This shows that payment choice is key.
‘Accepting cash payments should be made mandatory for essential services such as food, clothes, medicine, fuel, public transport and car parking.’
THE CASH EXPERT
Solution: Natalie Ceeney says shops should offer free cashback
Natalie Ceeney, author of a key report on access to cash, says: ‘We’ve all been in shops with signs saying ‘no cheques’, ‘no £50 notes’ or witnessed Scottish notes refused in England. But more recently, many of us have seen signs saying ‘card only, no cash’.
‘Some of this is down to Covid-19. But there are bigger issues. As bank branches have closed, the time and cost of handling and banking notes and coins have become too high for many shops. It’s easier to go cashless.
‘What does this mean if you can’t use digital? Perhaps you pay others to do your shopping, and cash is safer than handing over your card. Or you live in an area with poor broadband or mobile coverage. Or have a disability that means that digital products are hard to use. Or you use cash because it’s still one of the best ways of budgeting.
‘What would you do if supermarkets stopped accepting cash?
‘It might sound fanciful, but it happened in Sweden. The effect of Covid-19 could quite easily mean the same happens in the UK.
‘Our cash infrastructure is maintained by commercial players. Without intervention, they will do what’s in their commercial interest. That will mean more bank branches shutting, more ATM closures, and more shops going cashless.
‘Sweden has introduced a law requiring banks to give their customers appropriate access to cash. We need to do the same – and require regulators to make sure that the banks deliver.
‘If we plan properly, everyone wins. Sleepwalking into a cashless society will leave millions behind.’