Examination of Witnesses (Questions 780-799)
MR STEPHEN
TIMMS AND
MR JAMES
PARKER
10 FEBRUARY 2005
Q780 Mr Plaskitt: But that is before
the transaction begins. There was the case of a machine that I
myself tested in Leicester Square where there was no external
signage at all indicating the possibility of charging. This was
a Travelex machine. It was not until the fifth step, the fifth
screen I was looking at, the penultimate point before it spewed
the cash out, that it was telling me "You are going to be
charged £1.50". Presumably you do not think that amounts
to transparency?
Mr Timms: That does not sound
like an example of very good practice. It certainly would not
conform with the new LINK rules.
Q781 Mr Plaskitt: It would not; that
is perfectly correct. That is my final area. Do you have a view
on the enforceability of those LINK rules? The evidence we have
had suggests that LINK is not able to do an awful lot to ensure
compliance. I did ask them directly whether they were confident
that all of their members were compliant. They said they were
not. I then asked them what powers they had to ensure compliance,
and they said "only one and that is expulsion from LINK".
When I asked if they had expelled anybody, they said they had
not. Are you concerned about the enforceability of the LINK rules?
Mr Timms: I have in front of me
the resolution that was passed at their meeting on 14 December.
They talk about surveys being commenced as soon as is practicable
to determine compliance with all the rules on ATM signage. In
the case of non-compliance, there are sanctions, such as fines,
a refusal to allow the member to install any more ATMs and disconnection
of the non-compliant ATMs or of all the member's ATMs. It sounds
to me as though they are taking a reasonable array of sanctions
to deal with problems if they arise.
Q782 Chairman: Minister, on the aspect
of free and charging cash machines, you are saying that the number
of charging ones is going down. There is an issue of concentration
here. I think some people have forgotten that aspect. For example,
I mentioned this morning Canary Wharf. That is an area of deprivation
and there are a lot of free machines but you will know that a
lot of the people working there are working for pretty high salaries.
It is an area of deprivation. I think that is happening in a lot
of areas around the country where you have the commercial centres
and banks with their free machines and then almost everywhere
else there are charges. For example, I have had information about
my own constituency. There are 35 free and 21 surcharging machines
and 27 Post Offices as well. If all the Post Offices charged,
then the number of charging machines in my constituency would
be 60%. If only half the Post Offices charged, and the Post Office
representatives thought that was a sensible estimate, the figure
would still be 50%. My area has a 50:50 environment. The public
policy issue that is of concern and the issue of concentration
has to be kept in mind when we are looking at that. Would you
agree that figures such as that indicate that there could be room
for concern in the future?
Mr Timms: At the risk of being
a bit repetitive, I do want to make the point again that at all
those Post Offices it is possible for people to get money free
of charge over the counter. They do not have to use the machines.
Q783 Chairman: We had examples of four
out of 10 who could get the money over the counter who were going
to the cash machines.
Mr Timms: That is a problem, I
agree.
Q784 Chairman: There is an issue here.
Mr Timms: There is an issue, I
completely agree with that. Again, it is important that we make
sure all of those people know that they can get their money free
over the counter at the Post Office. In terms of are all the new
free ATMs going into relatively affluent areas or commercial centres,
I have not seen any data on that.
Q785 Chairman: I do have data.
Mr Timms: Certainly I have not
seen any data. I do know that of the 300 Lloyds TSB extra free
ATMs that went in last year, 130 were in petrol stations. I do
not think they are all going into big commercial centres but I
have not got any data either way.
Q786 Chairman: You gave a disappointing
reply to a Parliamentary Question put down by John Robertson MP
which was answered on 8 February when he asked what assessment
your Department had made of the impact of ATM charges on basic
bank account customers, what assessment had your Department made
of the effect of charging for use of cash machines in public places,
and what assessment you had made of the impact of ATM charges
on (a) financial inclusion and (b) low income groups, and the
glorious reply was "No such assessment has been made".
It is a pretty poor situation, Minister, you have really got to
improve.
Mr Timms: It was a truthful answer.
For me, the key concern with financial inclusion, which we are
focusing a lot of effort and, indeed, funding on, is the position
of people who do not have a bank account, of whom there is a strikingly
large number at the moment, a much larger proportion of people
in the UK than in many other countries. There are nearly three
million adults in households without a bank account of any kind.
I think that is a very major public policy concern. Here, of course,
we are talking about people who by definition do have bank accounts
because they are using ATMs, but I think that is a rather separate
consideration.
Q787 Chairman: At the moment there are
gaping holes in our collective knowledge, Minister. You should
be doing something and the Treasury should be doing something
about that as well in terms of trying to get information or finding
out the people who have this information so we can make a better
assessment.
Mr Timms: My colleagues in the
DWP do not believe that there is a problem for their customers
getting free access to their cash at the moment. If evidence was
to emerge that there was a problem in particular areas then I
think I would agree.
Q788 Chairman: There is a laid back approach
to this. There has not been any proactive approach to it. What
we are asking for here is a proactive approach to find out what
the problems are and when we get answers such as this it is pretty
dismal.
Mr Timms: I do not agree with
that. I think if there was to be evidence, if there was to be
a problem, the Department for Work and Pensions would be aware
of it and then there would be a need for action. As far as I can
see, at the moment, for people receiving benefits, getting access
to their cash free of charge is not a problem.
Q789 Chairman: Minister, with respect,
you do not know if there is a problem because you have not taken
any assessment and this is the issue. We are asking you to look
at that again.
Mr Timms: I do not agree with
that. I think if there was a problem we would be aware of it.
Q790 Chairman: You mean somebody has
to come knocking at your door.
Mr Timms: I think if there was
a problem people would be raising it.
Chairman: I do not accept that.
Q791 Angela Eagle: How? How would you
be aware of it?
Mr Timms: First of all, as I say,
the Department for Work and Pensions in Jobcentre Plus would become
aware of it because people would pretty quickly start to complain.
I think beyond that we would all become aware of it in our constituencies.
I think the Citizens Advice Bureaux would be aware of it.
Q792 Angela Eagle: 40% of people who
can get their cash free out of a Post Office are using ATM machines
because they are either in a rush, albeit the minority of them,
or most of them do not know that they can. Why would they actually
complain if they think that is the norm?
Mr Timms: That point I have agreed
on a number of occasions, that there does need to be more done
to draw people's attention to the facilities for the free obtaining
of cash in Post Offices. I just have not seen, and from all that
I have seen that the Committee has unearthed I see no evidence
at the moment that people on low incomes are having difficulty
getting their cash free of charge and if there was some evidence
I would be very concerned.
Chairman: I have a letter from a pensioner
which I will read out after Nigel has asked you his questions.
Q793 Mr Beard: Do you think that the
financial services industry as a whole should take responsibility
for ensuring that there is sufficient coverage of free cash machines
across the country and particularly in deprived areas, or is it
a responsibility of Government through institutions like the Post
Office?
Mr Timms: I think it is the responsibility
of Government to ensure that people, particularly people on low
incomes, know that there is free access to cash available. I do
not think it is a matter of great significance whether that is
through the Post Office over the counter or through ATMs. As long
as the provision is there in an accessible form then I think Government's
concerns are met. Beyond that, I think it is the responsibility
of the banks to meet the needs of their customers and the
commercial pressures on them, I think, are delivering in this
area in a reassuring way at the moment with the number of free
ATMs continuing to grow.
Q794 Mr Beard: The recent Treasury document
on promoting financial inclusion, which was published with the
Pre-Budget Report, does not contain any reference to the issue
of access to free cash withdrawals for low income households.
Can this issue be put, if it is not already, within the terms
of reference of the Financial Inclusion Task Force?
Mr Timms: As I said a moment ago,
the focus of our work on financial inclusion is on people without
bank accounts at all who are suffering very significant disadvantages
currently, in my view, because they have to operate in a cash
economy and end up paying quite a lot more for a number of goods
and services as a result. That is at the heart of the work that
the Financial Inclusion Task Force will be helping us with over
the next couple of years. That is rather separate from issues
around people who do have bank accounts, and by definition the
people we are talking about do have bank accounts, from the financial
inclusion work that was set out in that report at the Pre-Budget
Report time.
Q795 Mr Beard: A particular aspect of
this question of information is that in the Treasury submission
it says: "The Treasury have not seen any solid evidence to
support the assertion that there is a real problem with benefit
customers incurring significant costs through ATM charges".
Has there been any research that backs that up?
Mr Timms: No, I do not think I
can point to any specific research. We had this exchange a moment
ago. My view is that if there was a problem DWP would very quickly
pick it up and we would become aware of it, but they have not
done.
Q796 Mr Beard: So we do not really know
how many of the 600,000 withdrawals from Post Offices are undertaken
by benefit claimants, for instance?
Mr Timms: Sorry, what is the 600,000
figure?
Q797 Mr Beard: 600,000 withdrawals are
made through Post Offices each month and 75% of the ATMs in Post
Offices are pay machines.
Mr Timms: Sorry, these are 600,000
ATM withdrawals?
Q798 Mr Beard: Yes.
Mr Timms: No, I do not know how
many of those are made by benefit recipients.
Q799 Mr Beard: Also the Guide to Direct
Payment that the Department for Work and Pensions puts out does
not mention the fact that some cash machines, including 75% of
those in Post Offices, actually charge for cash withdrawals. Would
it not be reasonable to include that sort of warning or caution
in the guidance that the DWP puts out?
Mr Timms: It may well be.
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