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Federation of Small Businesses calls for action as Which? report finds cashpoints are disappearing
The Federation of Small Businesses has called for action after a report by consumer group Which? found almost a quarter of free-to-use ATMs have vanished since 2018 and almost half of the UK’s bank branches have closed since 2015.
The FSB and Which? have led the charge in campaigning for free access to cash in recent years, recently launching a small business-friendly cash pledge – in which businesses are encouraged to continue accepting cash, or risk alienating up to 2.5 million consumers reliant on notes and coins for every transaction.
Which? research published this week shows that since 2015, 4,685 bank branches have shut their doors, with a further 226 already scheduled to close by the end of the year. This equates to almost half of the country’s total network.
Compounding the problem for the millions of consumers who still rely on cash is the deterioration of the UK’s ATM network – and in particular free-to-use ATMs. Since 2018, Which? analysis found that 12,178 free-to-use ATMs have been cut, which is equivalent to almost a quarter of free-to-use ATMs.
Which? is calling for the government to finally deliver on its long overdue promise from 2020 by including legislation to protect cash in next month’s Queen’s Speech. Another year of inaction, it says, could risk an irretrievable collapse of the country’s cash system.
People living in rural communities, where residents often have to travel for miles to reach their nearest alternative source of cash, are among the most reliant on it.
However, digital infrastructure can be poor in these areas, making it harder for residents to embrace online banking and payments, says the consumer group.
Which? analysis found that the rate of branch closures in rural areas has outstripped those in urban areas. Since 2015, the banking network in rural constituencies has been cut by half (50.7 per cent), compared with 47.3 per cent in urban areas.
On average, rural constituencies have just 0.1 bank branches per 10sq km and 1.1 ATMs, compared with 2.6 branches per 10sq km in urban areas and 31.3 ATMs.
Jenny Ross, Which? Money editor, said: “While many consumers have embraced digital banking, there are still millions, including the elderly, vulnerable and isolated, who aren’t yet ready or willing to make that switch – and they must be protected.
“Our research highlights the devastating impact widespread bank branch and ATM closures have had on communities. With just two weeks to go until the Queen’s Speech, it really is now or never to halt the cash crisis.
“Though banking industry proposals for action are welcome, what’s needed most is the legislation promised by the government to protect cash. This should also include making the FCA the key regulator to protect cash services.”
FSB national chairman Martin McTague, who sits on the Access to Cash Pilots Board, said: “With our bank branch infrastructure further decimated over the pandemic, this Queen’s Speech is the last chance saloon where protecting access to cash is concerned.
“Four in ten small high street businesses say cash is the number one payment method among customers, and six in ten need to make regular cash deposits.
“Since the Access to Cash Review was published, we haven’t seen meaningful movement in the numbers of customers and small firms that rely on cash day-to-day. But we have seen further closures of bank branches, and new limits on opening hours – choking off supply while demand remains.
“Notes and coins are still important to the lives of millions of consumers, not least disabled people, the elderly and those on tight budgets. Physical currency is also a vital backup for when digital systems fail.
“Online banking brings massive benefits in terms of productivity and efficiency. Policymakers and banks should be working hand in glove to get everyone online and up to speed with all the perks that managing finances safely online can bring.
“But so long as the need for cash remains, free access should be protected. Often, it’s in areas where consumers are most reliant on notes and coins that pay-to-use machines pop up – every pound spent on accessing cash is a pound not spent with the local small businesses on which our recovery will depend.
“Legislation and clear oversight by a single regulator in this space is overdue – the former was promised years ago. It’s time to turn positive words into positive action.”
- In 2020 Swindon-based building society Nationwide extended its pledge not to leave any town or city in the UK where it has a branch until at least 2023.
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