PROPOSALS from the financial services watchdog to protect and widen access to cash are a “good start but could go further” – that’s the view of the Federation of Small Businesses (FSB) which suggests that they lack ambition and don’t go far enough.

The business group, responding to the Financial Conduct Authority’s (FCA) consultation on access to cash which closed yesterday, 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.

Its national chair, Martin McTague, said: “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.”
Maintaining reasonable access to cash for personal and business customers across the UK is behind the consultation which follows new powers granted to the FCA by the Financial Services and Markets Act 2023.

Among the FCA’s proposals is developing a more comprehensive cash assessment process that is more responsive to a wider range of local needs and meeting set timeframes for delivery of additional cash access services identified by cash access assessments, which it says will prevent unreasonable delays, reducing the cost burden on consumers and businesses that can arise from limited access to cash in their local area.

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While supporting these proposals, the FSB believes they do not go far enough in maintaining small firms’ freedom to choose cash as a form of payment, which it sees as “inseparable from the broader cash services ecosystem”.

The group said: “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.”

Mr McTague stressed that a small business “must be free to choose which payment options it wishes to accept, including cash”, adding: “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.

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“The FCA’s consultation rightly recognises this – it’s a good start, but could go further.”
Mr McTague said he was 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,” he noted.

“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.”

In a rallying call to the FCA, he said it was time for the financial watchdog 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 also look to the future, Mr McTague added. “Banking hubs and other solutions to access cash may well also be the best opportunities for building digital currency infrastructure in the future,” he said.

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“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.”

Banks, the FSB noted, “must be held to higher standards when considering the impact of their closures on access to cash” and “cash infrastructure should be considered a public good”.