Access to cash in Scotland

We recognise that the Government does not want to intervene in the detail of commercial decisions. However, we are concerned that a lack of data on cash usage in Scotland means Ministers have not had a clear picture of the implications of bank branch and ATM closures on communities in Scotland. We welcome the Minister’s recognition of the need for a more detailed picture of cash usage in Scotland, and it is important that this more detailed data be used to inform the Government’s legislative proposals.

We welcome recent initiatives announced by the Cash Action Group to ensure free access to cash in the absence of legislation. However, considering the scale of the population which remains reliant on cash, and likely will do so for the foreseeable future, this does not negate the vital need for legislation. While innovation in digital payments is welcome, Government action is required to ensure nobody is excluded from an increasingly digital economy.

We welcome the Government’s commitment to legislating to protect access to cash. However, we are disappointed about the extended period of time it took the UK Government to announce the legislation, considering the urgency of the issue. We look forward to seeing how specific safeguards to protect access to cash will be set out in the Financial Services and Markets Bill.

The reported increase in the number of retailers refusing to accept cash could significantly inhibit the ability of people who either rely on cash, or choose to use it as their preferred payment method, to participate in the economy and access goods and services.

There seems to be limited general data in relation to businesses accepting cash as a means of payment. It would be helpful for us to know how much data the UK Government holds on this, particularly in the context of higher inflation and increases in the cost of living.

We believe the issue of cash acceptance in a retail setting requires further investigation. We recommend that the UK Government should consider asking the Financial Conduct Authority (FCA) to investigate and monitor cash acceptance levels across the UK. If the FCA find a substantial number of retailers refusing to accept cash, the UK Government should introduce additional protections to ensure that consumers reliant on cash are not disadvantaged.

We are of the opinion that the current rapid rate of bank branch closures may have come about as a result of banks rushing to close branches before legislation to protect access to cash and banking services can take effect. We are concerned that the existing mechanisms to analyse the needs of customers and ensure services are available are inadequate to prevent unnecessary closures. We expect the Financial Conduct Authority to carefully monitor the quality of the analysis used by banks to justify branch closures. Furthermore, while we do not expect the Government to 28 Access to cash in Scotland intervene in genuine commercial decisions, we believe there is a case for action if banks are closing branches purely to pre-empt the legislative intent established in the Queen’s Speech. (Paragraph 47) ATM network

We welcome industry-led initiatives, such as LINK’s Financial Inclusion Programme, to provide free access to cash via free-to-use ATMs in the most rural and deprived areas of the UK. This is especially important in Scotland considering the physical and digital connectivity challenges it faces. However, it is unacceptable that an issue of such importance should be left to voluntary agreements which ultimately leaves them vulnerable and reduces certainty over the future of free access to cash in Scotland. Future legislation should therefore complement the industry- led initiatives, such as the Financial Inclusion Programme, and build on these to guarantee free access to cash for as long as it is needed.

We recommend that the UK Government should clarify their position on how the Financial Services and Markets Bill will interact with pre-existing industry-led solutions such as LINK’s Financial Inclusion Programme. Currently, LINK’s Financial Inclusion Programme is reliant on the voluntary membership of card issuers and ATM operators. We recommend that the UK Government consider legislating in the Financial Services and Markets Bill to mandate the membership of LINK for card issuers and ATM operators to ensure that the Financial Inclusion Programme can continue to provide free access to cash for as long as it is needed.

Deposit-taking ATMs would provide a valuable service to consumers and SMEs in Scotland that have lost their bank branches, while assisting in the sustainability of the ATM network and the long-term provision of cash in Scotland.

Attempts to introduce deposit-taking ATMs for both consumers and SMEs have been constrained by a considerable lack of progress from both the banking industry and the UK Government. Considering the strength of the evidence to support their introduction, we repeat our predecessor Committee’s recommendation that the UK Government set up a working group with industry to introduce network-wide deposit- taking ATMs. The rapid rate of bank branch closures and the growing rate of fee- charging ATMs brings into sharp relief the necessity for deposit-taking ATMs to be introduced in areas of greatest need. (Paragraph 67) Post Office

The Post Office play a substantial role in the provision of free access to cash for communities across Scotland. We commend the positive action taken by both the banking industry and the Post Office to increase the availability of banking services in Post Offices in Scottish communities.

Despite the efforts taken by the banking industry and the Post Office, the current cash infrastructure is fragile, and the Banking Framework Agreement is ultimately short-term and voluntary. A decision by any of the major banks to withdraw from Access to cash in Scotland 29 the agreement would have far-reaching consequences for millions of people and businesses that rely on cash. An issue of such importance should not be left to voluntary agreements.

Building on the structure and objectives of the Banking Framework Agreement, we recommend that the UK Government seek a long-term commitment from banks to maintain appropriate banking services for their customers using the Post Office network, to guarantee access to cash and basic banking services for all communities in Scotland. (Paragraph 80) 30 Access to cash in Scotland