Memorandum submitted by Lloyds TSB
Thank you for your letter dated 9 November 2004,
requesting Lloyds TSB's policy and views on the issues to be examined
by the Treasury Committee's short examination of cash machine
charges.
Before I comment on the issues which fall within
the scope of the Treasury Committee's study, I thought it may
be helpful if I provided some background information on Lloyds
TSB's position in respect of cash machines.
We believe cash machines are a vital part of
the overall service we provide for our customers. They want access
to their money and accounts at a time and a place that suits them.
Lloyds TSB has the second-largest cash machine network of any
bank in the UK, with some 4,220 cash machines. In recent years,
we have responded to customer demand by expanding our network
of remote[12]
cash machines, providing 24-hour access in more locations. We
have installed 200 new non-charging cash machines over the past
two years, conveniently located in sites such as petrol stations
and supermarkets, and we intend to site more cash machines in
such convenient locations in 2005.
I would now like to respond to the issues to
be examined by the Treasury Committee as set out below.
THE PRINCIPLE
OF CHARGING
AND THE
TREND TOWARDS
CHARGING
Lloyds TSB does not charge for withdrawals from
its cash machines and does not charge its customers for using
other ATM networks[13].
This has been our position since 1 January 2001. There is a significant
cost of providing this service—ranging from purchasing new
machines and upgrading technology, to daily maintenance and servicing—but
we absorb the cost as part of the overall package of banking services
we offer our customers. We currently have no plans to charge our
customers for using our network of cash machines.
Most withdrawals from cash machines—96%—are
free. There are currently 32,611[14]
Link cash machines which do not levy charges for withdrawing cash,
and this has increased by 3% over the last 2 years, which equates
to an extra 1,000 non-charging cash machines. While Nationwide
identifies a significant increase over the last six months in
the number of cash machines which charge, we believe it is not
the absolute number of charging cash machines that is relevant,
but the volume of transactions that take place through those cash
machines—which is minimal.
Cash machines at which a charge is levied, which
as already indicated account for only 4% of total cash withdrawal
transactions in the UK, make a charge as they are usually situated
in low transaction volume sites or on sites where the site owner
charges a significant rental. There is a market for non-branch
based cash machine sites, and cash machine providers compete for
these sites. The interests of the site owner are central to this
market and should be factored in to any review of a trend towards
charging. A site owner's decision to remove a non-charging cash
machine and replace it with a charging one, possibly benefiting
from a share of the income from charges and higher rent, usually
is outside the control of the cash machine provider.
TRANSPARENCY
Lloyds TSB has always supported transparency
in relation to cash machine charges. We were the first bank to
introduce a cash machine "code of conduct" in March
2000 which included a commitment to provide pre-notification of
any cash machines charges before consumers withdrew their cash.
We believe that transparency is key to the discussion
on cash machine charging. We fully endorse the Link code which
specifies that all cash machines which charge must carry a sign,
on-screen or external, that is clearly visible to card holders
before the card is inserted, that customers are told the amount
of the charge at the time of the transaction and are given the
opportunity to cancel without charge. We believe that if cash
machine acquirers commit to follow this code in practice it provides
a sufficient degree of transparency to consumers.
The decision to notify customers of a change
in status from a non-charging to a charging cash machine rests
with the site owner. However, we are in support of any initiatives
which increase transparency for customers.
FINANCIAL EXCLUSION
AND LOCATION
Lloyds TSB is the most socially inclusive bank
in the UK. Our customer base is more reflective of the UK population
than any other bank, with the highest proportion of customers
in lower income groups than any of our major competitors. We aim
to be as inclusive as possible in our dealings with our customers.
Our branches and cash machine are to be found in a wide range
of communities, covering both high and low income areas[15].
We were one of the first banks to have an agency agreement with
the Post Office, enabling all our customers to withdraw cash,
over the counter, free of charge, and we are one of only two high
street banks to retain this service for our customers.
I trust that we have provided the Committee
with the information it requires on Lloyds TSB's policy and views
on cash machine charges. If the Committee requires further information
on any point, please do not hesitate to contact me.
6 December 2004
12 A "remote" Lloyds TSB cash machine is
defined as one that is not on Lloyds TSB premises. Back
13
However, customers using a credit card at a Lloyds TSB cash machine
may be subject to a cash advance fee levied by their card issuer. Back
14
The latest figures we have available are from Link as at October
2004: of the total Link network of 53,507 cash machines, 32,611
(61%) are non-charging, while 20,896 (39%) levy charges for cash
withdrawals. Back
15
With reference to the low-income communities referred to in James
Plaskitt's adjournment debate of 27 October 2004, Lloyds TSB currently
has two through-the-wall 24-hour access cash machines in the L5
postal district of Liverpool, in addition to an in-branch cash
machine which is available during business hours, and a through-the-wall
24-hour access cash machine in the G34 postal district of Glasgow-these
machines do not charge for cash withdrawals. Back
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