FCA sets out new rules to maintain access to cash in increasingly digital world

In view of the government’s recent policy statement on access to cash and in view of the mandate of the Financial Markets and Services Act 2023 (FSMA 2023) to set out rules and regulations to ensure that UK consumers and small business entities (SMEs) continue to have access to cash, the Financial Conduct Authority (FCA) has now launched a new consultation (CP23/29). In it, the FCA proposes to establish a new Sourcebook, the so-called Access To Cash Sourcebook (ATCS), to require banks and building societies designated by the government to „assess and fill gaps, or potential gaps, in cash access provision that significantly impact consumers and businesses“.
Specifically, the FCA proposes to implement new rules in beforementioned Sourcebook to
(1) require designated firms to conduct an assessment to identify, if there are any gaps in local cash access due to closures or changes in services of existing facilities: In detail, the FCA would require banks and building societies to conduct such assessment, if – and only if – any of the following two trigger events occur within eight weeks from occurrence:
– the entity plans to close cash access points, including bank branches or ATMs, reduces services (e.g. via the reduction of opening hours), or plans material changes in the provision of cash access services (e.g. the change from free-to-use cash access service to pay-to-use service) or
– the entity receives a formal „cash access request“ from someone in the local community, a representative organization, or other individuals with a substantial interest in maintaining or improving cash access services (local residents, businesses, etc.).
The FCA would also require affected, designated institutions to disclose to clients the procedure for submitting a „cash access request“ and the information to be provided therein. The FCA also proposes to refrain from the requirement to perform an assessment where, for example, customers weren’t aware of cash access points or where there are multiple ATMs closeby and a firm proposes to remove an ATM.
(2) define the assessment process: In detail, the FCA would require designated entities to perform the described step-by-step analysis in case any of the two trigger events occur. Specifically, in a first step, institutions would have to identify, if there is or would be a deficiency following a trigger event. This would include the identification of possibly affected businesses and people and the geographic specifics (are there other banks providing services? Are there ATMs?).
In a second step, institutions would have to evaluate the potential impact of a change/reduction/elimination of service by considering – among others – the factors identified in the first step (the number of residents and SMEs affected, the time required to access the nearest possible alternative cash access points, or geographic specifics (e.g. the area is a tourist area)). Details on these factors and how to assess their impact are outlined in the consultation paper.
Subsequent to this impact assessment, in a third and final step, institutions would be required to assess potential remedies where significant impacts are expected (e.g. NO closure of a branch, extension of services at other branches, installment of a new ATM vs. the maintenance of a branch, agreemens with other banks, etc.). Firms should thereby consider the potential costs of these measures and any other factors to determine whether or not it is reasonable to counteract the trigger event.
(3) take adequate measures and related regulatory requirements: If the assessment shows significant deficiencies in cash access following the occurrence of a trigger event, designated firms would need to provide additional cash services to fill those gaps, as long as it’s reasonable to do so (as evaluated under step 3). For bank closures or significant changes in branch operations leading to such deficiencies, firms would have to offer additional services no later than three months from the date of publication of the assessment report and in any event no later than the planned closure date.
(4) implement corresponding governance requirements: Finally, institutions would be obliged to establish, evaluate, and regularly review policies and procedures regarding the beforementioned assessments. This review process should incorporate the feedback from stakeholders (affected SMEs, local residents), aligning with the Consumer Duty’s principle of continuous learning from real customer outcomes. Additionally, designated institutions would have to report substantial changes in their assessment policies and procedures to the FCA.
—
As the above summary only presents the key provisions of the proposed new cash access requirements, please refer to the enclosed consultation document for more detailed, comprehensive information.