Halt ATM closures or Britain will soon be cashless, warn MPs

BRITAIN risks becoming a cashless society – hitting the vulnerable – unless radical action is taken to prevent ATM closures, MPs warn today.

Thousands of free cash machines across the country have either shut or started charging customers in the past year after a change in how they are paid for.

MPs on the Treasury select committee said urgent action is required to prevent huge swathes of the UK losing access to paper money.

They warned that ministers must intervene to stop parts of Britain being cut off from cash altogether.

They said: ‘To protect the freedom of consumers to pay for goods and services how they choose, free access to cash must be maintained for those who need it. This includes free-to-use ATMs. Failure from the Government to intervene risks the UK inadvertently becoming a cashless society.

‘For the most vulnerable in society, this would have stark consequences.’ More than 8million Britons rely on cash to get by, including many older people and some of the poorest households in the UK, according to official figures.

The MPs’ report focuses on access to financial services and takes aim in particular at the disappearance of ATMs. The free cash machine network is paid for by high street banks, which transfer a fee to independent ATM operators when a customer withdraws money using their card.

But the banks have cut these fees from 25p per transaction to 22.5p. This is despite the five biggest banks making a combined £30billion of profit in 2018. Independent operators claim this has made vast numbers of ATMs unprofitable so they have to close or start charging.

At least 3,200 free cash machines have disappeared since January 2018 – almost 6 per cent of the total.

The committee also warned that a wave of bank branch closures in the past decade has caused serious damage. The biggest lenders shut around 800 branches last year as part of a wave of cutbacks which has seen thousands vanish since the financial crisis in 2008.

When a branch shuts, it can force vulnerable people to travel miles to access basic services. And the closure of the last bank in town can devastate high streets because shoppers have one less reason to visit – and businesses struggle to deposit their takings. The report argues that the Post Office, which offers some basic services such as money deposits and withdrawals, is no substitute for a real bank.

The MPs call for lenders to pool their resources to offer a ‘banking hub’ which can provide better coverage when a town’s last branch disappears.

They note that Post Offices are state- owned and provide banking services at a loss, meaning that when a bank pulls out of an area, taxpayers pick up the tab.

The report also criticises banks and insurers for ripping off loyal customers by luring them in with eye-catching initial prices, then hiking the cost for those who stay for more than a year. The MPs said if finance firms do not change their ways it may be necessary to impose a legal ‘duty of care’ requiring them always to act in customers’ best interests.

Stephen Jones, of UK Finance, last night defended the banking industry. He insisted: ‘The industry takes its societal responsibilities extremely seriously and is committed to looking after every customer, including those in vulnerable circumstances.’

‘Consequences will be stark’