Last chance to save cash
As campaigners call for a new law to help keep our high streets alive, could this be the...
CAMPAIGNERS are calling on the Government to introduce legislation safeguarding access to cash withdrawals on the high street. They fear that unless it acts quickly, swathes of the country will be left with no access as yet more bank branches and fee-free cash machines are culled in response to the pandemic.
On Friday, Natalie Ceeney, author of an authoritative report into access to cash 20 months ago, told The Mail on Sunday that the high street is at a financial tipping point.
If legislation was introduced promptly, she says it could be ‘transformative’, providing consumers and businesses with exciting new ways to access and deposit cash – through community banks, free cashback services at small shops and nationwide cash deposit schemes.
‘The mood music for legislation is right,’ she adds. ‘The result could be better cash access in a more sustainable way.’ But if the Government dithers, she warns the consequences for high streets up and down the country will be dire. ‘Local communities would die,’ she says.
Ceeney’s ground-breaking report in March last year warned that eight million people would struggle to cope in a cashless society. Before the pandemic struck, three out of every ten purchases were made by cash. But the figure could shrink to one in ten within 15 years.
Ceeney is not a lone voice. Other consumer groups and campaigners are equally keen for the Government to intervene. David Fagleman, a director at financial consultancy Enryo, believes that accepting cash payments should be ‘mandatory’ for businesses providing essentials such as food and medicine.
The call for intervention comes as the Government is about to shut the door on a ‘call for evidence’ from consumer and business groups on how access to cash can be protected. This closes on November 25. It is then expected ministers will introduce legislation in the new year although the pandemic could push this back.
The Government has already laid out some plans. It is keen for retailers to offer customers cashback facilities without shoppers having to make a purchase – as is the requirement now.
This would be possible once the transition period with the EU ends on December 31 because it is Brussels rules that determine how cashback services are currently provided.
Come January, these rules could be scrapped, preparing the way for greater provision of cashback facilities. Recycling cash in local communities in such a way would reduce the need for businesses to bank deposits – increasingly difficult as branches are either closed or their opening hours restricted – while providing consumers with a convenient way to obtain cash.
It would also mitigate the impact of bank branch and cash machine closures. Branches are shutting at an average of 55 a month while more than 3,000 free-to-use cash machines have been removed this year.
Although wider cashback provision would be welcomed by campaigners, it is only part of the access to cash jigsaw. Ceeney believes more needs to be done. In the submission to the Government in recent days, she called for additional measures.
Key is a legislative requirement placed on banks to provide adequate cash services in communities – both consumer access to cash and cash deposit services for small businesses.
As part of this, she says communities should be able to have additional banking services – for example, a free-to-use cash machine – with their request heard by an independent organisation appointed by the regulator.
This body would have the power to instruct banks to provide a service where it is obvious cash access is an issue.
The legislation, adds Ceeney, should be overseen by one regulator – the Financial Conduct Authority (FCA) – rather than the current patchwork of regulators.
Other ideas include greater promotion of free-to-use cash services. This could be through an app enabling consumers to locate the nearest free-to-use cash access point; operators of fee-charging cash machines being required to show where to find the nearest free alternative; and clear branding for cashback services.
Ceeney says banks should also be required to fund the installation of automated deposit machines in supermarkets and post offices. Without regulatory intervention, she fears more businesses will decide not to accept cash. Ceeney is currently overseeing the piloting of various cash sustainability initiatives in work funded by the banking industry.
These include Post Office banking hubs and shared bank branches. She hopes any legislation will allow these ideas to become part of the new financial high street.
John Howells, chief executive of cash machine network Link, says he would be disappointed if the Government’s legislative response was centred on wider use of cashback.
On Friday, he told The Mail on Sunday: ‘Any legislation must be focused on meeting the banking needs of communities – and not
give the banks a further excuse to shut yet more branches.
‘Banks must be required to provide access to cash in a way that meets the needs of individual communities.
‘Need should be determined by the communities, not by the banks.’
WHAT THE EXPERTS SAY THE CONSUMER GROUP
GARETH Shaw, head of money at Which?, says: ‘Coronavirus has pushed an already fragile cash system to the brink of collapse. Proposals such as cashback without purchase have the potential to make a significant difference in communities that have seen their access to cash cut by widespread closures to ATMs and bank branches.
‘But they must be part of a wider strategy.
‘Legislation to protect cash access must be introduced urgently, while the FCA should take responsibility for the retail cash system.
‘The regulator must closely monitor cash acceptance alongside its work overseeing access, as protecting the provision of cash will be severely undermined if there is nowhere to spend it.’
THE CHARITY
CAROLINE Abrahams, director of Age UK, says: ‘We have heard many times over the last few months how cash is an essential part of older people’s lives.
‘It helps them budget effectively if they’re on a tight income, pay back a carer or friend who does their shopping, and is an essential backup if they’re not online or live in an area with poor connectivity.
‘As bank branches close and cash machines disappear, cash is harder to access. We are hurtling towards a cashless society without enough consideration for the many people who will be left behind. Making sure older people have the coins and banknotes they need to keep spending is surely in the best interests of businesses and the economy too.
‘In terms of legislation, the creation of a universal service obligation – a requirement for banks to ensure cash access across the whole country – would be a great starting point.’
THE ANALYST
DAVID Fagleman, director of financial consultancy Enryo, says: ‘Our research shows that 72 per cent of consumers think the move to a cashless society is happening too fast. It also indicates that 81 per cent think a range of payment options, including cash, should always be available in shops.
‘Worryingly for retailers, over a quarter of people say they will no longer shop in places that decide to stop accepting cash. This shows that payment choice is key.
‘Accepting cash payments should be made mandatory for essential services such as food, clothes, medicine, fuel, public transport and car parking.’
THE CASH EXPERT
NATALIE Ceeney, author of a key report on access to cash, says: ‘We’ve all been in shops with signs saying “no cheques”, “no £50 notes” or witnessed Scottish notes refused in England. But more recently, many of us have seen signs saying “card only, no cash”.
‘Some of this is down to Covid-19. But there are bigger issues. As bank branches have closed, the time and cost of handling and banking notes and coins have become too high for many shops. It’s easier to go cashless.
‘What does this mean if you can’t use digital? Perhaps you pay others to do your shopping, and cash is safer than handing over your card. Or you live in an area with poor broadband or mobile coverage. Or have a disability that means that digital products are hard to use. Or you use cash because it’s still one of the best ways of budgeting.
‘What would you do if supermarkets stopped accepting cash?
‘It might sound fanciful, but it happened in Sweden. The effect of Covid-19 could quite easily mean the same happens in the UK.
‘Our cash i nfrastructure is maintained by commercial players. Without intervention, they will do what’s in their commercial interest. That will mean more bank branches shutting, more ATM closures, and more shops going cashless.
‘Sweden has introduced a law requiring banks to give their customers appropriate access to cash. We need to do the same – and require regulators to make sure that the banks deliver.
‘If we plan properly, everyone wins. Sleepwalking into a cashless society will leave millions behind.’
LAST Sunday, the MoS’s personal finance experts Jeff Prestridge and Rachel Rickard Straus battled it out on these pages, arguing for and against ending free bank accounts.
We also put the question to readers and many of you got in touch with your views. Here are some of the highlights.
Banks should not axe our free accounts. If they need money, they should stop paying staff massive bonuses and put their customers first. The banking crisis of 2008 should have taught them to value us.
Carole Errington, 72, near Newcastle upon Tyne
If my bank, NatWest, introduces charges, I will close both of our current accounts and withdraw every penny saved with them.
After 70 years as a customer, I do not want to change banks, but my wife and I will not be treated in this way by a bank the taxpayer part owns and our taxes helped to save in 2008.
They have had use of my money since 1950 when I opened my first savings account with the then National Provincial Bank, later to merge with Westminster bank.
Terry Matthews, 85, Upminster, London
I started work at Barclays in 1968 when I was 16. In those days, most workers were paid in cash in a wages envelope. The banks wanted their custom and promised that because they could make money lending out the workers’ money, there would never be any need to charge people a fee for having a bank account.
I can see no reason why they should renege on that promise.
Customer service is rotten and people are forced into online banking against their will.
When my husband died, I asked for my account to be named Mrs DA Harvey-Williams and they did a sloppy job.
No Mrs on the cheque book and my name repeated on the savings account so I now have a joint account with myself.
I’ve been with the same branch of Barclays for 52 years and they treat me as though they’ve never heard of me. So no to charges for current accounts.
Diana Harvey-Williams, 68,
Lincolnshire
Banks should not be charging ordinary folks, especially when the ‘top’ lot get paid huge pensions and golden handshakes. Yes, we all need to pay for a service, but not to subsidise the lifestyle of the ‘bosses’.
Kay Butterworth, 73, Hampshire
In my view, everyone should pay a fair price for the services they receive.
I worked in the banking system for more than 40 years.
One of my duties was to look at customers’ accounts that had become overdrawn or were in excess of an agreed overdraft limit. Notwithstanding the fact that the majority of these customers had written cheques to meet bills knowing that they had insufficient funds – and not had the courtesy to contact me in advance – I was embarrassed that my bank required me to charge them an excess fee of £25 despite being aware they were clearly in financial difficulties.
The reason these exorbitant charges had to be levied was that ‘Joe Public’ expected debit and credit cards, monthly statements and a high street or call centre contact all for free.
Peter Neild, 73, Llandudno
Of course banks should not charge for a current account. I hold an average balance of £1,800 and do not receive interest on that.
The banks use this money and if they were to levy charges they would make a whole lot more for doing precisely nothing.
Pat Singh, 76, Dartford, Kent
Bank accounts should be free. Once we have lost cash and are totally financially digital, the banks will squeeze us until the pips squeak and we will have no way of escaping. An ostensibly free account is the least they can provide.
Sharon Beale, 58, Essex
Ask yourself – if current accounts are not profitable for the banks, why have they offered incentives of up to £175 to switch to them?
Garry, Cardiff
Why should they charge us when they are using our money to make themselves a profit?
Pammie, Seaford
Surely if a bank wants to borrow my money until I spend it, they should pay me interest based on their own loan interest rates as I am effectively lending them my money?
Paul James, Bristol