All eight of the UK’s largest retail banks, including Scotland-based RBS, Bank of Scotland and TSB have set out the importance of protecting access to cash, but concerns have been raised over varying timeframes of their commitment to two vital industry cash schemes.
Campaigners have been urging the banks to publicly commit to maintaining cash access for the millions of people in Scotland who still rely on it.
And they were given a two-week deadline to confirm that they will continue membership of two vital industry cash-access schemes managed by ATM operator LINK and the Post Office, which are critical to protecting current provision of cash withdrawal for millions of people until legislation is introduced.
The move has been supported by former financial ombudsman Natalie Ceeney, author of the Access to Cash review who said the banks and regulators should step in.
But the consumer organisation Which? which has been pushing for banks' commitment said all banks stopped short of explicitly committing to either scheme for the entirety of the currently open-ended period until the previously announced legislation is introduced.
The organisation said this is, in large part, due to the lack of clarity on the timing for the government’s plans.
READ MORE: Scots pay £10m in a year for the privilege of access to their cash
It said that the responses underline the "urgent need" for government action to ensure the long-term future of the cash system. Legislation – promised by the Government in the New Year – would guarantee "widespread geographic access to cash" and a minimum number of "withdrawal points" in towns and villages, protecting access to cash and wider banking facilities in the UK.
But Which? said the government is still to set out its vision for the future of cash, including the scope and timing of legislation to protect access. Last month research showed that over 2m Scots have been refused payment with notes and coins during the pandemic, threatening the viability of the cash network.
The consumer organisation said: "While it is encouraging that some banks have set out their commitment to cover a period within which they expect legislation to pass, without clear direction from the government on the future of cash, it is unclear how long that pledge can reasonably remain in place. "This has left us concerned that banks are unable to commit to anything beyond their existing agreements, and is calling on the government to urgently set out a roadmap for protecting access to cash for those who depend on it.
"We believe there is a risk that if this roadmap isn’t set out as soon as possible, irreversible damage could be done to the UK’s cash infrastructure in the interim. If even one bank was to withdraw support from either LINK or the Post Office, with the latter’s agreement with banks ending at the end of next year, widespread cash access will no longer be viable.
"This could leave many of the more than two and a half million people in the UK who are reliant on cash to pay for essential products and services facing a serious struggle to access their money."
The coronavirus pandemic has piled further pressure on the UK’s cash infrastructure, which has been hit by a sharp decline in businesses accepting cash and the closure of thousands of ATMs and bank branches over the last 12 months. A study warned of a cash network in danger of crumbling revealing that 30 per cent of Scots reported being unable to pay with cash at least once when trying to buy something since March, when coronavirus restrictions were first introduced.
Data shows that more than one in ten of Scotland's network of cash machines have been shut down at a rate of over two a day as the number of cash withdrawals has plummeted during the pandemic.
More than 600 have been shut between November 2019 and September last year, with hundreds more believed to have been temporarily shut because they are located in premises that were closed due to Covid restrictions.
Analysis produced exclusively for the Herald by the consumer organisation Which? in October revealed that nearly half (47%) of the over 1000 bank branches which were open in Scotland five years ago will have shut by next year.
Anabel Hoult, chief executive of Which?, said: “The rapid shift to a cashless society threatens to cut off access to those who depend on cash to pay for essential products and services.
“It’s reassuring that all the major banks have reiterated their commitment to protecting cash for these customers, but without a clear indication of when legislation will be introduced, there remains significant uncertainty for what this might mean in the not too distant future.
“The government must set out a roadmap for legislation at the earliest opportunity, to ensure that cash remains a viable payment method for as long as it is needed.”
Responses
Lloyds Banking Group (which includes Bank of Scotland and Halifax) said it was in negotiations with the Post Office about continuing membership of its scheme, and added that it had no current plans to leave LINK, adding that it believes the focus should remain on the Financial Conduct Authority and Payment Systems Regulator agreeing a long term solution for maintaining UK cash access.
The NatWest Group (which includes RBS) stated both the Post Office and LINK schemes are key to maintaining and evolving the UK's cash model, and said it will continue its close partnership to work with the Post Office to “improve and evolve” the service provided under its Banking Framework.
TSB said it had no plans to change its relationships with the Post Office and LINK, and confirmed it was committed to the schemes.
READ MORE: The South Lanarkshire town that was left with no banks
Barclays said it committed to the existing Post Office Banking Framework and the LINK scheme, until the end of 2022, when it believes there is a reasonable expectation that legislation on cash access will be in place.
HSBC noted that it was in negotiations for extending the Post Office Banking Framework, which banks are signed up to until the end of next year. It made no reference to LINK’s scheme.
Nationwide Building Society said that, although it cannot make an open-ended promise, it is willing to commit to continuing its existing arrangements with Link and the Post Office on the expectation that legislation will be introduced sometime this year and supports Which?’s call. It said it would look at the situation again if it looked like legislation is going to slip into 2022.
Santander said it will continue to be a member of these schemes, as well as continue to support wider industry activity to protect the UK’s cash system.
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