Proposals from a financial services watchdog to protect and widen access to cash are a “good start but could go further”.
That is the view of the Federation of Small Businesses (FSB), which has responded to the Financial Conduct Authority (FCA)’s consultation on access to cash, closing today (8 February 2024).
The FCA was given the task in the Financial Services and Markets Act from last year of “seeking to ensure reasonable provision” of cash deposit and withdrawal facilities, for business and personal customers.
The FCA’s proposals include*:
- Developing a more comprehensive cash assessment process that is more responsive to a wider range of local needs
- Publishing assessment outcomes and making processes transparent
- Responding to a wider range of trigger events to undertake a cash assessment in a local area
- Meeting set timeframes for delivery of additional cash access services identified by cash access assessments. This will prevent unreasonable delays, reducing the cost burden on consumers and businesses that can arise from limited access to cash in their local area.
FSB supports these proposals, but believes they do not go far enough in maintaining small firms’ freedom to choose cash as a form of payment, which we see as inseparable from the broader cash services ecosystem.
For example, FSB believes that the proposals do not adequately address the ongoing decline in cash access infrastructure, with bank branch closures continuing at an alarming rate, and a shrinking and increasingly fragile free-to-use ATM network.
The consultation also overlooks essential services such as local cash deposit facilities for small business owners, and assisted cash services that offer personal interaction.
Moreover, the FCA’s proposed cash access request scheme is insufficient, as it puts businesses’ and consumers’ concerns effectively as a last resort and is unlikely to stem the tide of bank closures and the decline in cash infrastructure.
To strengthen the FCA’s proposals, FSB is calling for:
- The FCA to broaden its focus beyond ATMs to include comprehensive support for cash deposit services and face-to-face assistance
- FCA powers to be leveraged to expedite the development of banking hubs, ensuring they include SME banking and deposit services. Despite the partnership with cashpoint provider LINK identifying the need for over a hundred hubs, progress has been slow, with only 33 opened so far
- Efforts to maintain consumer cash withdrawal access to consider as well the necessity of local cash management infrastructure for SMEs to offer cash payment options. Cash infrastructure should be considered a public good, meaning that concerns about competition sensitivities do not fully apply. Banks must be held to higher standards when considering the impact of their closures on access to cash.
Martin McTague, FSB’s National Chair, said:
“A small business must be free to choose which payment options it wishes to accept, including cash. To enable this, it’s vital for the infrastructure required for cash to remain available in all areas.
“Cash access is too important to be left to innumerable individual commercial decisions which, taken together, represent a significant threat to people and businesses’ ability to withdraw, process and deposit cash.
“The FCA’s consultation rightly recognises this – it’s a good start, but could go further.
“We’re concerned that the FCA’s proposals won’t be enough to pause the trend seen in recent years towards fewer free cashpoints and bank branches.
“Cash is vital as a competitor to other forms of payment, and as a payment option when digital systems go down, or in areas with poor reception. Many vulnerable groups, from elderly people to those fleeing domestic violence, rely on being able to use cash, and it is also a key payment method for many visitors to the UK who are wary of high bank fees when paying by card.
“Now is the time for the FCA to shore up and defend a flexible payments ecosystem which can not only support small businesses and vulnerable communities with cash, but can also help to prepare the infrastructure for a diverse range of payment options including a digital currency.
“The proposals should look to the future, too. Banking hubs and other solutions to access to cash may well also be the best opportunities for building digital currency infrastructure in the future.
“As a country, we need a flexible and diverse payments ecosystem that is ready for changing consumer behaviour and needs.
“The FCA should work with the Treasury to safeguard the cash ecosystem, taking a more holistic and comprehensive view of the issue. Now is the time to be ambitious, in order to build the payments infrastructure needed by small businesses and consumers now and into the future.”
* See page 5, Consultation Paper CP23/29 (via fca.org.uk/publications/consultation-papers/cp23-29-access-cash)
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About FSB
As the UK’s largest business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed.
FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.