UK’s cash system ‘will collapse without legislation to protect it’
The UK’s cash system is reaching a tipping point and will collapse without legislation to protect it, according to research into how people access coins and notes.
Panel members behind the Access to Cash Review, which published its final report a year ago, said legislation is needed to protect cash for as long as people need it.
They said that in the 12 months since the final review, while some progress has been made, significant issues within the cash infrastructure remain.
The review was set up by ATM network Link as an independent body to understand consumer needs and implications for cash access requirements over the next five to 15 years.
It previously predicted that society would be at the point of being “virtually cashless” by 2035, with fewer than one in 10 transactions being made in cash.
But it said trade association UK Finance now expects the UK to hit this point within the next decade.
Panel members also pointed to figures showing that, over the past year, 13% of free-to-use UK ATMs have closed, as lower levels of cash use have made them economically unviable. A quarter (25%) of ATMs now charge people to withdraw their cash.
They also said the Post Office’s cash access service has come under serious threat.
Barclays recently reversed plans to stop customers accessing cash withdrawal services from post offices after a backlash.
Various initiatives have been set up by the industry to help maintain people’s access to cash, including cashback initiatives at local shops and a “request an ATM” service.
But the panel said it believes the only way to manage the cash system is for the Government to legislate and give regulators the tools that they need to protect cash access.
Banks should be obliged to provide suitable cash access to their customers, it argued.
Natalie Ceeney, independent chairwoman of the Access to Cash Review said: “The UK is fast becoming a cashless society – without knowing what this really means for consumers or for the UK economy. Many people may want a completely digital future, but we need to make sure that this shift doesn’t leave millions behind or put our economy at risk.
“I’m glad that our report of a year ago made the industry and regulators take the issue of cash far more seriously. We welcome the positive initiatives from the banking industry and much needed co-ordination from regulators.
“However, commercial pressures on all businesses mean that we cannot rely on the status quo, and we can see serious strains emerging.
“Regulators currently don’t have the tools that they need to ensure that everyone who needs cash can get it. Now is the time for Government to protect cash and allowing us to look ahead to how we can prepare for a digital future which includes everyone.”
Which? money editor Jenny Ross said: “The cash network has already been dramatically eroded, and, unless urgent action is taken in the Budget, it’s clear that it will crumble completely.
“Some industry-led initiatives are encouraging, but they cannot stem the tide of bank branch and cash machine closures alone, and without legislation many more communities will be cut off from cash or forced to pay hefty fees to access their own money.”
A spokesman for the Treasury said: “Technology has transformed banking for millions of people, but we know that many still rely on cash.
“That’s why we’ve invested £2 billion to ensure everyday banking services are available at 11,500 Post Office branches across the UK.
“We’re also working closely with industry and regulators to ensure everyone who needs cash can access it.”
Federation of Small Businesses (FSB) national policy and advocacy chairman Martin McTague, who also sits on the steering committee for the Access to Cash Pilots scheme which launched last week, said: “Our hope is that the access to cash pilots will spur new forms of collaboration between small businesses, banks, ATM companies, regulators and card providers which can empower the many communities hit by bank branch and cash point closures.
“Looking ahead to the Budget, it’s crucial that the Government delivers on its broadband pledges.
“Doing so will enable more rural small firms to bank online and set up card payment facilities.
“We also need to look at how we make offering cashback commercially viable for small businesses. The right financial incentives are a must.”
A UK Finance spokesman said: “The banking and finance industry recognises the importance of ensuring cash remains free and widely available for those that continue to need it and, as acknowledged by the Access to Cash Review panel, has introduced a number of measures to achieve this.
“These include arrangements by Link to protect free-to-use ATMs in more remote and rural areas and to ensure that every high street in the UK has free access to cash.
“There is no ‘one size fits all’ approach however and understanding the needs of local communities is critical.
“That is why, alongside Link’s commitments, UK Finance supports the new Community Access to Cash Pilots initiative which aims to help local communities develop and support access to cash solutions which work for them.”