Conclusions and recommendations
Role of Cash in Society
1.We believe that there will continue to be a need for cash for the foreseeable future and welcome the Minister’s agreement about its continued importance for society, particularly in Scotland. While we welcome a number of the individual initiatives that the Minister mentioned, which we will explore later in this Report, we believe there is a need for an overarching strategy to guarantee consumers access to cash. This is especially important in Scotland given the physical and digital connectivity challenges it faces. We endorse the recommendations in the Access to Cash Review and recommend that the Government publish a strategy outlining the steps it will take to ensure Scottish consumers’ continued access to cash. (Paragraph 11)
Scotland’s ATM network
2.Ensuring consumers still have free and reliable access to their cash is essential to a well-functioning and fair economy. We are concerned by the ATM closures that have been seen since the interchange reductions were introduced. We do not believe that the fourth interchange reduction should go ahead and call on the government to intervene to prevent further reductions if necessary at least until the government publishes a strategy outlining the steps it will take to ensure Scottish consumers’ continued access to cash. We further recommend that the Payment Systems Regulator should publish a full assessment of the economic and social impact of any future interchange reduction before it can be implemented. (Paragraph 19)
3.While we welcome the recent changes to the Financial Inclusion Programme we believe the scope of the programme is too narrow. The Financial Inclusion Programme should aim to encourage new ATMs to open in vulnerable communities not just try to slow the rate of closures and aim to ensure 24/7 access to cash, to ensure that communities have access to a reliable and resilient network of ATMs. We recommend that the PSR review the Financial Inclusion Programme and set out how it can encourage greater coverage of ATMs in the most rural, remote and deprived communities. (Paragraph 28)
4.Introducing universal deposit-taking ATMs would provide a valuable service to businesses that have lost their bank branches while helping with the sustainability of the ATM network. Given the lack of interest in the scheme to date, and LINK’s view that a “central steering hand” is needed to get a scheme implemented, we recommend that the Government set up a working group with industry to introduce network-wide deposit-taking ATMs. (Paragraph 33)
Bank Branch Closures
5.We are disappointed that banks are continuing to close branches in Scotland and are concerned by the devastating impact closing bank branches can have on communities and small businesses. We believe that the Government has a role in ensuring communities continue to have access to banking services. We recommend that the Government seek a commitment from banks that they will not close the last bank in town. If such a commitment is not forthcoming we believe the Government should consider further measures, including legislation, to ensure communities still have access to vital banking services (Paragraph 43)
6.While the concept of banking hubs has potential, the current plans for these hubs fall far short of what is needed as they do not offer enough services to be a realistic alternative to bank branches. We call on the banks to revisit the services offered in hubs and to commit to extending the pilot to a rural location in Scotland. We recommend that the Government is involved in the discussions between banks, so it can address any competition and regulatory barriers to providing an expanded service. (Paragraph 47)
7.The existence of a Post Office is often cited by banks who are closing branches as being an alternative way for customers to access banking services. While they do offer some services, by the Post Office’s own admission they are not an alternative to a bank branch. However, if banks are expecting the Post Office to take on more of the services they used to offer to communities we believe they must properly support the Post Office in taking on these functions. (Paragraph 54)
8.We therefore recommend that the Government broker conversations between the Post Office and high street banks to ensure banks provide proper support and remuneration to the Post Office for taking over several of its functions. This could include: reviewing the level of renumeration subpostmasters receive for providing banking services, offering closed bank branches as possible sites for Post Offices, better promotion of Post Office services by banks and increase support for subpostmasters in identifying fraud. (Paragraph 55)
9.Throughout this inquiry, we have heard of deficiencies and frustrations from the public on the regulation of bank branch closures and believe the current system of regulation is failing the consumer. We repeat our previous recommendations for
- Consultation ahead of closure decisions being taken
- Banks to publish impact assessments on the impact of closures on vulnerable groups
- The publication of reports in individual closures programmes
We are disappointed with the lack of progress made on these recommendations since our last Report. Furthermore, given the large number of former bank buildings in Scotland that are lying empty after their closures, we believe that Standard should be amended to require banks to consult with communities on possible reuse of these buildings as part of the closure process. (Paragraph 62)
10.We still believe that there is a case for statutory regulation of bank closures. Given the important role that both ATMs and bank branches play in access to cash we are unclear why there is statutory regulation for ATMs but not bank branch closures. We call on the Government to report back on their discussions with the LSB as soon as practicable. If discussions are not successful we recommend that the Government consult on introducing statutory regulation governing bank branch closures. (Paragraph 63)
UK Cash Network
11.We welcome the Government response to the Access to Cash Review in the creation of JACS and the Minister’s view on reforming cash infrastructure to make the system more efficient to buy time for wider reform of the system. We ask Government to update the Committee on the outcome of discussions between regulators and publish an action plan for how it will reduce the cost of the UK’s cash infrastructure. (Paragraph 69)
Published: 29 August 2019