The FCA is proposing regulations to ensure access to cash for personal and business customers across the UK in the wake of enhanced powers granted to the FCA under the new Financial Services and Markets Act 2023. 

Under the proposed rules, designated banks and building societies need to conduct assessments to identify gaps in access to cash. This will consider local factors such as demographics or transport infrastructure. 

If assessments reveal significant local gaps, designated firms are required to deliver reasonable additional cash services to fill these voids before closing any cash facilities, including bank branches.

“These proposals set out how banks and building societies will need to assess and plug gaps in local cash provision. This will help manage the pace of change and ensure that people can continue to access cash if they need it,” said Sheldon Mills, executive director of consumers and competition at the FCA.

This comes on the backdrop of the UK, along with many other countries, marching slowly towards cashless societies. According to a report from UK Finance, 83% of people in the UK now use contactless, with no age group or region falling below 75%.

“The pandemic resulted in some marked changes in payments behaviour and while it’s too early to say whether they are permanent changes, we did see an acceleration in some existing trends such as the reduction in cash usage and the growth in contactless and mobile payments,” said David Postings, chief executive of UK Finance.

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It’s crucial to note that while the FCA’s new powers do not prevent bank branches from closing, the rules will have an impact where branches are a key local source of cash. According to market research, 60% of Scottish banks have shut down since 2015, and more than 170 are due to shut in 2024. 

The consultation period for these proposed rules is open until 8 of February, with the FCA anticipating finalisation by Q3 of 2024.