Cash access should be guaranteed and not just left to market forces, says report

The UK’s fractured cash system is in danger of collapsing – and market forces alone cannot be relied upon to ensure that people can continue to access coins and notes – a major review warns.

The findings were made by the Access to Cash Review, which said “cracks in the system are showing” – and bank branch and ATM closures are just the “tip of the iceberg”.

It described the cash system as “on the verge of collapse”.

The review has published final recommendations urging the Government, regulators and banks to act now.

It recommends that a “guarantee of cash access” should be introduced to help the UK avoid sleepwalking into a cashless society – with those providing essential services required to allow consumers to pay by cash.

Cash should be seen as a core part of the UK’s infrastructure and not just a commercial issue, it said.

As the report was released, the Bank of England said it would bring bodies together to develop a new system for wholesale cash distribution that will support the UK in an environment of declining cash volumes.

Sarah John, Chief Cashier, said: “The action we are announcing today will help to support cash as a viable means of payment for those who want to use it.”

The report said: “For consumers, we believe that it is both sensible and commercially viable for the banks and regulators to offer a ‘guarantee’ of cash access.

“In part, they can do this by encouraging innovative ways of accessing cash, rather than just protecting increasingly unviable ATMs or, worse, charging consumers for access.”

The review is funded by cash machine network Link, but is independent from it.

The report said the problem is not just about people being able to withdraw cash – it is also about whether, in future, people will be able to make purchases at places which accept cash payments.

It said the economics of handling and accepting cash could lead to an increasing number of retailers going cashless.

The findings suggest eight million adults would struggle to cope in a cashless society.

Cash is now only used for three in every 10 transactions, down from six in 10 a decade ago and is forecast a fall to as low as one in 10 transactions within the next 15 years.

The report said the shift away from cash towards digital payments is placing “significant strain” on the UK’s cash infrastructure, which costs £5 billion a year to run.

Natalie Ceeney, independent chairwoman of the Access to Cash Review said the dangers of “sleepwalking into a cashless society” mean millions of people could be left out.

She said: “There are worrying signs that our cash system is falling apart.

“ATM and bank branch closures are just the tip of the iceberg, underneath there is a huge infrastructure which is becoming increasingly unviable as cash use declines.”

Nicky Morgan, who chairs the Treasury Select Committee, said: “It’s clear that the hard work for policymakers must start here”.

And Economic Secretary to the Treasury, John Glen, said: “We’re working closely with regulators and the banking industry to ensure that people continue to have real choice over how they spend their money.”

Eric Leenders, managing director, personal finance, UK Finance said: “The industry supports the recommendations in this timely report.”

Chris Hemsley, head of policy for the Payment Systems Regulator, said: “We have been carrying out work in this area to identify longer-term solutions to address this issue.

“We all need a good choice of how to pay.”

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