Banks warned on branch closures as access to cash to be ‘protected in law’
The banking sector is being warned it faces penalties if it does not secure free access to cash for the UK population, including businesses, following waves of branch closures over more than a decade.
Hours after Sky News revealed the Financial Conduct Authority (FCA) was to be given powers to fine banks that fail to provide free access to cash, the Treasury confirmed the guidelines the industry was expected to follow.
The legal framework showed that no person or business should be further than three miles away from facilities to withdraw or deposit cash including a cash machine, otherwise known as an ATM.
It also pledged that no customers should face additional or hidden charges for the services and that if a facility is being withdrawn, a replacement should be put in place before the closure takes place.
The move follows a backlash against the disappearance of physical banking sites with charities, MPs and consumer groups long arguing the vulnerable, particularly the elderly, are being denied face-to-face banking services in their communities.
The issue has dogged the sector since the financial crisis of 2008 when branch closures, as part of cost-cutting measures, gathered pace.
The industry has, in more recent times, blamed the surging use of digital banking services by consumers and businesses for culls to branch numbers.
It argues that many are not being used enough to make them financially viable.
Figures released last month by the Unite union suggested more than 6,000 branches had been lost since 2015 alone, with other sites or post offices taking up the slack.
The Brixham Banking Hub. Pic: HMT
Industry statistics showed there were 51,272 cash machines in the UK last year, 78% of which were free to use.
The government placed access to deposit and withdrawal facilities under the auspices of the FCA for the first time last year.
While the regulator will be given the power to fine banks which fail to adhere to the new guidelines on access to cash, it has previously found there is little cause for immediate alarm.
While 85% of transactions are made online, the government says access to cash is important for millions
Its research, published in May, showed 96.3% of the UK population currently lived within 1.24 miles of a free-to-use cash access point, with 99.8% within 3.1 miles.
The government said in its statement: “As it stands, the vast majority of people living in urban areas can access cash deposit and withdrawal services within one mile; with rural dwellers around three miles away.
“Today’s policy statement makes clear that the FCA should use its powers to maintain this level of coverage while recognising that needs may differ by location and change over time.”
Economic Secretary to the Treasury, Andrew Griffith, added: “Whilst the growing choice and convenience of digital payments is great, cash has an important and continuing role to play.
“That’s why we are taking action to protect access to cash in law and laying out that this means fee-free withdrawals and the availability of cash facilities within a reasonable distance.
“People shouldn’t have to trek for hours to withdraw a tenner to put in someone’s birthday card – nor should businesses have to travel large distances to deposit cash takings.
“These are measures which benefit everyone who uses cash but particularly those living in rural areas, the elderly and those with disabilities.”
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John Howells, the chief executive of ATM operator LINK, said the plans would complement the body’s existing commitments to ensure every high street gets free access to cash.
“The UK is not ready to become a cashless society, so it’s good to see these rules become law,” he added.
Jenny Ross, editor of Which? Money, welcomed the measures but said they needed to go further.
“The government must put in place measures which ensure those who want to withdraw or deposit cash are appropriately served in their local communities.
“The Financial Conduct Authority must make use of its new powers to ensure banks meet their obligations and stand ready to direct them to address any gaps.”
Waspi campaigners have threatened legal action against the government unless it reconsiders its decision to reject compensation.
In December, the government said it would not be compensating millions of women born in the 1950s – known as Waspi women – who say they were not given sufficient warning of the state pension age for women being lifted from 60 to 65.
It was due to be phased in over 10 years from 2010, but in 2011 was sped up to be reached by 2018, then rose to the age of 66 in 2020.
A watchdog had recommended that compensation be paid to those affected, but Sir Keir Starmer said at the time that taxpayers could not afford what could have been a £10.5bn package.
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From December: No pay out for ‘waspi’ pension women
On Monday, the Waspi campaign said it had sent a “letter before action” to the Department for Work and Pensions (DWP) warning the government of High Court proceedings if no action is taken.
Angela Madden, chair of Waspi (Women Against State Pension Inequality) campaign group, said members will not allow the DWP’s “gaslighting” of victims to go “unchallenged”.
She said: “The government has accepted that 1950s-born women are victims of maladministration, but it now says none of us suffered any injustice. We believe this is not only an outrage but legally wrong.
“We have been successful before and we are confident we will be again. But what would be better for everyone is if the Secretary of State (Liz Kendall) now saw sense and came to the table to sort out a compensation package.
“The alternative is continued defence of the indefensible but this time in front of a judge.”
The group has launched a £75,000 CrowdJustice campaign to fund legal action, and said the government has 14 days to respond before the case is filed.
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What is a Waspi woman and what happened to them?
About 3.6 million women were affected by their state pension age being lifted from 60 to 65. File pic: PA
In the mid-1990s, the government passed a law to raise the retirement age for women over a 10-year period to make it equal to men.
The Conservative-Liberal Democrat coalition government in the early 2010s under David Cameron and Nick Clegg then sped up the timetable as part of its cost-cutting measures.
In 2011, a new Pensions Act was introduced that not only shortened the timetable to increase the women’s pension age to 65 by two years but also raised the overall pension age to 66 by October 2020 – saving the government around £30bn.
About 3.6 million women in the UK were affected – as many complained they weren’t appropriately notified of the changes and some only received letters about it 14 years after the legislation passed.
While in opposition, Rachel Reeves, now the chancellor, and Liz Kendall, now pensions secretary, were among several Labour MPs who supported the Waspi women’s campaign.
The now-Chancellor said in a 2016 debate that women affected by the increase in state pension age had been “done and injustice” and urged the government to “think again”.
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A government spokesperson said: “We accept the Ombudsman’s finding of maladministration and have apologised for there being a 28-month delay in writing to 1950s-born women.
“However, evidence showed only one in four people remember reading and receiving letters that they weren’t expecting and that by 2006, 90% of 1950s-born women knew that the state pension age was changing.
“Earlier letters wouldn’t have affected this. For these and other reasons, the government cannot justify paying for a £10.5 billion compensation scheme at the expense of the taxpayer.”
Russian oligarchs with links to the Kremlin can now be banned from the UK, the government has announced as part of a fresh sanctions package on the third anniversary of Vladimir Putin’s invasion of Ukraine.
The Home Office said “elites” linked to the Russian state can now be prevented from entering the UK under the new sanctions.
Those who could be banned include anyone who provides “significant support” to the Kremlin, those who owe their “significant status or wealth” to the Russian state, and those “who enjoy access to the highest levels” of the regime.
The announcement has been timed to coincide with the three-year anniversary of Russia’s invasion of Ukraine.
Another set of sanctions is expected from the Foreign Office on Monday.
Security minister Dan Jarvis said: “Border security is national security, and we will use all the tools at our disposal to protect our country against the threat from Russia.
“The measures announced today slam the door shut to the oligarchs who have enriched themselves at the expense of the Russian people whilst bankrolling this illegal and unjustifiable war.
“My message to Putin’s friends in Moscow is simple: you are not welcome in the UK.”
The UK government said Kremlin-linked elites can pose a “real and present danger to our way of life” as they denounce British values in public “while enjoying the benefits of the UK in private”.
It said they can act as “tools” for the Russian state to enable President Putin’s aggression in Ukraine and beyond.
Shortly after the war in Ukraine started on 24 February 2022, the UK imposed financial sanctions on oligarchs, including closing legal loopholes used to launder money.
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In November last year, Operation Destabilise, run by the National Crime Agency (NCA), successfully disrupted two billion-dollar Russian money laundering networks operating around the world, including in the UK which was a key hub.
They provided services to Russian oligarchs and were helping fund Kremlin espionage operations.
Ekatarina Zhdanova is said to have run a money laundering network called Smart that has been shut down. Pic: NCA
One of the key players was identified as Ekaterina Zhdanova who is alleged to have run a money laundering network called Smart. She was sanctioned by the US in November last year and is currently in French custody awaiting a trial.
A total of 84 arrests were made under Operation Destabilise in November and more than £20m in illicit funds seized.
The NCA has made a further six arrests since then and seized £1m more in case.
The networks also helped Russian clients to illegally bypass financial restrictions to invest money in the UK.
US officials have been in talks with their Russian counterparts in Saudi Arabia over the future of Ukraine for the past week.
However, neither Ukraine nor any European country was at the table, with Ukrainian President Volodymyr Zelenskyy saying he will not accept any peace deal Kyiv is not involved in.
Sir Keir Starmer has backed Mr Zelenskyy on that so all eyes will be on the prime minister when he visits Mr Trump in Washington DC this week.
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