Memorandum submitted by John Robertson
MP
INTRODUCTION
1. I welcome the Treasury Committee's decision
to hold an inquiry into cash machine charges; and I am pleased
to have the opportunity to submit written evidence.
2. My intention is to illustrate the issues
with reference to the situation in Glasgow and, in particular,
my own constituency which includes some of the most deprived areas
in the country.
THE KEY
ISSUES
3. There are two separate reasons for the
growth in fee-charging cash machines. First, much of the growth
comes from such machines being installed in locations where there
was no bank-operated free ATM, such as pubs and post offices.
4. Second, some banks have encouraged this
growth. For example, HBOS and Abbey have sold their non-branch
based ATMs to fee-charging providers. The Royal Bank of Scotland
acquired Hanco, a provider of fee-charging machines.
5. These two issues are often conflated.
Several members of the committee rightly pointed out during the
evidence session on 21 December that, where "convenience"
machines are located and levy a surcharge, consumers have a choice
about whether or not to use them. Such machines will stand or
fall on the basis of consumer demand for them. However, the main
issue of concern to me is financial inclusion. If a growth in
fee-charging cash machines is combined with a reduction in the
number of non-charging cash machines, consumers are denied choice.
They are forced to rely on charging ATMs.
6. The denial of choice is greatest in areas
where there are few non-charging cash machines; and amongst people
who are unable to travel to areas where non-charging cash machines
are located.
A CASE STUDY:
GLASGOW
7. Fee-charging ATMs are disproportionately
located in poorer areas. For example, on Hyndland Road (Glasgow,
G12) only one ATM out of 10 makes a charge. On Shettleston Road
(G33) in the poorest Parliamentary constituency in Britain, six
out of 10 ATMs make a charge.
8. This situation is replicated in my own
constituency in the north-west of Glasgow. In Glasgow Anniesland,
(see the Annex for a map of the constituency) the worst housing
is found in the peripheral inter-war and post-war housing estate
of Drumchapel. Within the constituency, recipients of Income Support
are concentrated in Drumchapel. However, non-surcharging ATMs
are largely confined to branches of banks at Anniesland Cross—the
opposite end of the constituency. This means that poorer residents
are more likely to be charged for making withdrawals from their
bank accounts.
9. Residents of Drumchapel face further
difficulties because they are less likely to be able to travel
to a non-surcharging ATM. Many do not have a car and find frequent
journeys on public transport too expensive. In addition, bus services
along some routes are being reduced.
10. The growth in the direct payment of
benefits into individuals' bank accounts means that many of my
constituents are being charged simply for receiving their benefits.
11. Glasgow Anniesland has the highest proportion
of pensioners in any constituency in the UK. In addition to the
problems mentioned above, elderly people often face additional
mobility difficulties. They are even less likely to be able to
travel to non-surcharging ATMs elsewhere in the constituency.
Therefore, financial exclusion is a major problem: a large body
of people in this country are being denied choice as a result
of the banks reducing the presence of non-charging ATMs in their
neighbourhoods.
12. Some constituents have brought to my
attention the risk of crime resulting from these developments.
The levying of a surcharge that is the same no matter what amount
is being withdrawn provides an incentive for individuals to withdraw
larger amounts of money. The elderly, therefore, may carry on
their person more cash than they would otherwise prefer to have
done, thus leaving them more vulnerable.
13. The above combination of circumstances
and events means that my poorer constituents have less choice
as a result of the growth of surcharging ATMs at the expense of
non-surcharging ATMs.
PARLIAMENTARY ACTION
14. I have tabled two Early Day Motions,
both of which have gained cross-party support. EDM 451 ("Fee-charging
ATM machines") reads: That this House condemns the policy
of high street banks to sell off their non-branch based ATM machines;
notes that many have been replaced by ATMs which charge an average
of £1.50 per withdrawal; further notes that fee-charging
ATMs are disproportionately located in poorer areas where few
people can afford to travel to free alternatives; is concerned
that this is a particular problem for people whose state benefits
are paid into their bank accounts, and who are therefore charged
simply for receiving their benefits; is disappointed the Royal
Bank of Scotland has not done more to alleviate this problem since
is acquired Hanco, which operates around a quarter of all free-charging
ATMs; concurs with the Citizens Advice Bureau and the National
Consumer Council, who have criticised the Royal Bank of Scotland
for effectively levying a tax on the poor through their actions;
further concurs with Gamblers Anonymous, who have criticised Hanco
for locating an ATM in an amusement arcade in Glasgow; and calls
on the Royal Bank of Scotland and other high street banks to guarantee
the future of free withdrawal facilities at ATMs in disadvantaged
areas. At the time of writing, it has 110 signatures.
15. EDM 651 ("Fee-charging ATMs in
post offices") reads: That this House views with concern
the increasing number of fee-charging ATMs in post offices; notes
that up to 78%. of ATMs in post offices now levy a surcharge;
is concerned that many people on fixed and low incomes rely on
ATMs for access to their state pensions or benefits; is further
concerned that many benefit recipients cannot afford to travel
elsewhere to use free cash machines and so they are disproportionately
affected by this problem; believes that customers of any bank
or building society should have the right to withdraw money free
of charge if an ATM is located in their post office; notes that
the major suppliers of ATMs to the Post Office are the Alliance
and Leicester and Hanco; and calls on the Post Office, the Alliance
and Leicester and Hanco to guarantee free withdrawals from ATMs
in post office premises. At the time of writing, it has 54 signatures.
16. In Business Questions on 3 February
2005, I asked the Leader of the House if time could be found for
a debate on this subject. He replied that, "I represent a
constituency with many outlying former pit villages, so I absolutely
understand the point that my hon. Friend makes. It would be very
helpful if I could secure a private Member's debate, in which
other hon. Members could express their view on the matter and
the banks and other institutions responsible could be held to
account. As he says, the poorest and some of the oldest citizens,
who do not have cars or the ability to go to a free ATM, are most
punitively hit by such behaviour. I would certainly welcome the
opportunity of a private Member's debate, but I cannot promise
him one in Government time." (3 Feb: Column 1018)
RECOMMENDATIONS
17. Our first requirement is for accessible
accurate information from banks about their services. For example,
the Royal Bank of Scotland states that it has increased its number
of non-charging ATMs.[34]
In the Evening Times on 14 January, a spokesman for the Royal
Bank of Scotland said in response to my motion, "We have
increased our network of free ATMs by over 20% since 1999 to 6,108
across the UK." The key issue, however, is not just the number
of free ATMs but their location. My poorer constituents need free
ATMs to be located in their neighbourhoods. ATMs that are grouped
in big branches, sometimes as a means of enabling banks to avoid
employing more cashiers, are less useful to my constituents.
18. Information from LINK about the location
of ATMs needs to be more widely available. In response to my enquiries,
the Alliance & Leicester advise me that they have 909 ATMs
in post offices, of which 425 levy a surcharge. However, another
member of LINK has claimed that the Alliance & Leicester actually
have 1,289 ATMs in post offices, of which 803 levy a surcharge.
Each side claims to be correct, neither is willing to back down,
and it is difficult for anyone to establish the truth. It would
therefore be much easier if this information were made publicly
available by LINK.
19. One possibility is that banks could
sign up to the Code of Practice proposed by the Nationwide Building
Society, which would build on the LINK agreement on early warnings
for consumers before using a charging ATM and would help ensure
customer awareness and transparency, and promote fair practice
among cash machine providers.
20. However, this Code of Practice in itself
would not appear to guarantee the future of a viable network of
non-charging cash machines throughout the UK. Banks have a legal
obligation to their shareholders, but many have recognised that
they have additional social responsibilities. The Royal Bank of
Scotland declares that, ". . . our success is built on the
strength of the communities in which we operate. Our commitment
to these communities is at the heart of our business."[35]
The Alliance and Leicester state, "We aim to build close
ties with the communities in which we operate across the UK .
. ."[36]
My preference would be for banks voluntarily to recognise their
responsibility to consumers by guaranteeing access to free withdrawal
facilities within walking distance of customers in poorer communities.
21. If banks do not face up to their responsibilities
in this way, we can either accept ever greater financial exclusion,
or the government can intervene. The first option is obviously
not desirable, for the reasons I have outlined above, but neither
is the latter. Legislation to compel banks to ensure there is
an acceptable network of non-charging ATMs would be complex. Subsidies
to banks to provide non-charging ATMs where they are not profitable
would be hard to justify, given the very substantial profits made
by many of the banks under consideration.
22. Our preference, therefore, should be
for banks to ensure that their rhetoric about their responsibilities
is reflected more clearly in their business practice.
34 Evening Times, 14 January 2004. Back
35
http://www.rbs.co.uk/Group_Information/Corporate_Responsibility/Community_Investment/default.asp Back
36
Corporate Social Responsibility Report 2003, Alliance
& Leicester plc, 2003. Back
| 
