Hundreds of bank branches and free-to-use cash machines are being shut and taken out of service every month, hurtling the country towards a cash crisis at terrifying speed.
So what bright solution have the banks come forward with to tackle the issue?
A new ‘action group’. Seven big banks and building societies agreed this month to form an Access to Cash Action Group to discuss ideas about how cash access could be protected.
But when we asked the banks if their involvement with the group would stop or slow down their plans to shut branches, not one of them said ‘yes’.
Mass shutdown: The country is hurtling towards a cash crisis at terrifying speed
Critics warn that without the Government stepping in with legislation, this talking shop could prove no more than a smokescreen allowing banks to use their involvement to appear as if they care about access to cash – all the while ploughing on with shutting branches.
Derek French, former director of the Campaign For Community Banking Services, says: ‘Banks are not interested in supporting communities – this is all just balderdash. It is all about making a profit.
‘This new group could be used as a cover by banks to pretend they care while frantically axing branches.’
Anabel Hoult, chief executive at consumer group Which?, believes that without legislation to ensure nationwide access to cash and banking services, the action group is doomed to fail customers.
She says: ‘There is a risk that without the Government playing its part, the effort of this group will go the same way as other initiatives – insufficient to tackle the creaking cash infrastructure. Legislation is needed for effective action.’
Many people are happy making payments solely by card and doing all of their banking online.
However, more than five million adults are reliant on cash, and could be left financially excluded if the country’s cash system shrinks further or even collapses.
Millions of small businesses are also still heavily dependent on cash sales.
Legislation to protect access to cash was promised more than a year ago, but has been delayed for a number of reasons, including the pandemic.
There were hopes that plans for legislation would be set out in the Queen’s Speech earlier this month, but it did not include so much as a whisper about cash.
Economic Secretary to the Treasury John Glen said earlier this month that a consultation on cash legislation would be launched this summer – though it might not be until October that its findings are announced.
In the meantime, the Financial Conduct Authority has urged banks not to shut branches ‘where this could impact vulnerable customers’. However, the City watchdog does not have the teeth to enforce these demands.
Experts warn that the threat of legislation – but with no concrete plan announced – is actually escalating the cash crisis.
Derek French believes banks are speeding up branch closures before any legislation that could curb their closure plans or require them to cough up for an alternative, such as a shared banking hub.
He says: ‘There is a mad dash to shut banks because of a fear the Government will eventually bring in cash access rules that make it hard to close branches still open. Those still in towns may be forced to foot the bill for a shared bank.’
He adds: ‘You just have to look at the places where closures are being made to see such tactics. Many banks are now quitting busy towns and not just isolated communities. They fear becoming the last bank in town.’
The banks signed up to the action group are Barclays, HSBC, Lloyds, NatWest, Santander and TSB. Nationwide Building Society and industry body UK Finance, have also joined.
The new group has signed up to five commitments.
These are ensuring cash is available to all who need it; being supportive of any community access-to-cash pilot schemes; working with other banks to consider possible models for future access to cash; protecting the current infrastructure until alternatives are available; and finding potential ‘cold spots’ – where poor cash access is found.
Their support should be commended, but in the meantime Santander plans to axe 111 branches by the end of this August, while TSB is half way through closing 164 branches. HSBC is cutting 82 branches this year while Barclays is culling 63.
Lloyds shut 56 branches in 2020 and intends to close a further 27 this year.
Lost bank branches are not the only way in which access to cash is being withdrawn. Free-to-use cash machines are also disappearing.
About 8,700 have been ripped out since 2018, according to Which?. When a bank closes a branch it usually takes away its cash machine too.
Banks have a lot to gain by supporting alternative ways to access cash that do not rely on bank branches, as it helps justify their closure plans.
However, there is no substitute for a high street bank that offers face-to-face advice and support for those who need it, and a trusted alternative to cash machines for those who do not feel comfortable withdrawing their cash on the street.
The newly-formed action group is being chaired by ‘community access to cash’ campaigner Natalie Ceeney, who has separately helped to set up two shared bank pilot schemes – one in Rochford, Essex, and the other in Cambuslang, South Lanarkshire, which are being run until September.
As part of her pilot scheme six free cash machines are also being installed in locations nationwide and new cashback initiatives are being trialled.
Ceeney is hopeful banks will support her call to save cash, even if the solution does not stretch to keeping branches open. She believes the group could provide a great forum to find cost-effective ways to solve the crisis.
She says: ‘We have found there is a way forward using the pilot scheme model of shared banking hubs, cashback facilities being offered by retailers and new ATMs where deposits and withdrawals can be made.’
Ceeney adds: ‘Such solutions will save the banks money in the long term if laws are brought in that demand that access to cash continues to be offered.’
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