1 Introduction
1. Recent years have witnessed a rapid decrease in banking infrastructure in Scotland, diminishing people’s ability to access cash and other banking services. Since 2015, 53% of Scotland’s bank branches have closed, which is the highest percentage loss of the four UK nations, according to Which?.1 Consumers can also access cash via the automated teller machine (ATM) network, but since 2018, 20% of Scotland’s free-to-use ATMs have closed.2
2. The Minister, John Glen MP—Economic Secretary to the Treasury—told us that in 2009, 56% of transactions were in cash, but today cash payments represent only 17% of all transactions.3 Despite this, cash remains the second most frequently used form of payment, second only to debit cards.4 The 2019 Access to Cash Review—an independent review established to consider consumer requirements for cash—highlighted that the UK is not ready to go cashless, and that over 8 million adults would struggle to cope in a cashless society.5 In 2022, the Royal Society of Arts’ (RSA) Cash Census found that the “section of society that would feel left behind in a cashless society, remains almost identical” from the Access to Cash Review.6 The Minister, John Glen MP, told us that 5.4 million people, or about 10% of adults in the UK, are reliant on cash.7
3. The Covid-19 pandemic saw retailers seek to encourage customers to use contactless means of payment, whilst successive lockdowns across Scotland and the UK accelerated the transition to online banking due to temporary branch closures.8 Richard Piggin—Head of External Affairs and Campaigns, Which?—told us of a recent return in cash demand, but highlighted that it is “not towards pre-pandemic level”.9 LINK also said that they do not believe ATM use will return to pre-pandemic levels, and that people who were using less cash before the pandemic are now comfortable solely using contactless or digital methods of payment.10
4. Whilst innovation in the financial sector should be welcomed, there are significant concerns about the ability of vulnerable groups and those living in isolated or rural locations to continue to access cash, if branch closures and changes to the ATM network continue on the same trajectory. There is also a concern that the transition to digital will overlook those who prefer to use cash, for example for budgeting reasons, and those who prefer to bank in branch rather than online.
The Financial Services and Markets Bill
5. Our predecessor Committee recommended that the UK Government should consider legislation to ensure communities still have access to vital banking services.11 We were absolutely delighted to hear that the UK Government committed to legislating to protect access to cash in the 2020 Spring Budget.12 Following this, the “Access to Cash: Call for Evidence” opened in October 2020, outlining the UK Government’s legislative aims, with the resultant “Summary of Responses” published in July 2021.13 Subsequently, the UK Government published the “Access to Cash: Consultation” in July 2021, seeking views on legislative proposals to protect access to cash. The Consultation closed in September 2021, with the “Summary of Responses” published in May 2022.14 The Summary of Responses reviews the findings from the consultation, as well as outlining the UK Government’s plans for legislating to protect access to cash in the Financial Services and Markets Bill.15 Additionally, in April 2021, the UK Government accepted an amendment to the Financial Services Bill (now Act) to allow consumers to access cashback without having to make a purchase.16
6. As announced in the 2022 Queen’s Speech, the Financial Services and Markets Bill contains provisions to ensure people across the UK can continue to be able to access their own cash.17 The result of several Parliamentary contributions and repeated calls for legislation, the Financial Services and Markets Bill “will ensure the continued availability of withdrawal and deposit facilities across the UK, and that the country’s cash infrastructure is sustainable for the long term”.18 Under the Bill, the Financial Conduct Authority (FCA) would “be granted new powers over the UK’s largest banks and building societies, to ensure that cash withdrawal and deposit facilities are available in communities across the country”.19 The UK Government therefore intends to appoint the Financial Conduct Authority (FCA) as the “lead regulator” for retail access to cash, who would therefore have the responsibility for monitoring the coverage of access to cash.20
7. More specifically, the UK Government intends to enable HM Treasury to specify “geographic baselines for reasonable access to cash withdrawal and deposit facilities across the UK”; the baselines, however, will remain flexible in order to respond to changing cash demand over time.21 The specific geographic baselines, set by HM Treasury, will be informed by the FCA’s efforts to monitor coverage of access to cash across the UK.22 Additionally, there may be separate baselines for withdrawal and deposit facilities, with distances to deposit facilities likely to be greater than those for withdrawal facilities.23 To reflect the different geographical circumstances in urban and rural areas, there may be different geographic baselines for withdrawal and deposit facilities in urban and rural areas.24
8. The UK Government also intends to provide HM Treasury with powers to “designate firms to bring them in scope of requirements under legislation”.25 The largest banks and building societies will be classed as “designated firms”, considering market share in terms of number of accounts, and the value of deposits in those accounts.26
9. We welcome the fact that the UK Government is now legislating to protect access to cash, and this reflects the frequency that the issue has been raised in Parliament. Furthermore, the UK Government’s decision to legislate is a positive response to the efforts of this Committee and our predecessors, to illustrate the significance of this issue for people in Scotland. We look forward to reviewing the more detailed proposed legislation in due course, when Parliamentary time allows.
Context
10. This is not the first time a Committee has looked at these issues. Our predecessor Committee held a short inquiry in 2018 and produced a report following the decision of RBS to close 62 branches across Scotland.27 In 2018, it took evidence on the ATM network in Scotland28 and in 2019 held an inquiry and produced a report into access to cash in Scotland.29 Concerns over access to cash, particularly bank branch closures, remain a predominant feature in many Committee Members’ constituencies. We were recently alerted to growing concerns about access to cash by correspondence from Unite the Union, regarding the closure of 12 Virgin Money branches across Scotland.30
11. We held three public oral evidence sessions with trade unions, consumer groups, financial bodies, the Post Office, and the UK Government. We also conducted a public survey seeking views from people in Scotland on both cash access and cash usage and received 225 responses.31 We would like to thank everyone who contributed to our investigation, as well as those who responded to our public survey.
12. We made every effort to ensure the findings of this Report are accurate and up to date; however, there is the possibility that aspects of policy may evolve quickly in the period between publication of our report and the Government’s formal response to our conclusions and recommendations.
2 The role of cash in Scotland
13. Despite reductions in cash usage in recent years, approximately 5.4 million adults in the UK rely on cash to a great extent or very great extent in their daily lives, roughly 10% of adults.32 Adrian Roberts—Chief Commercial Officer, LINK—told us that approximately 500,000 people in Scotland are dependent on cash, which amounts to approximately 1 in 10 people in Scotland.33 The 2019 Access to Cash Review highlighted that the UK is not ready to go cashless, and that the consequences to society and individuals of not having this viable method of paying for goods are potentially severe. The Review found that around 17% of the UK population—over 8 million adults—would struggle to cope in a cashless society.34 More recently, in March 2022, the Royal Society of Arts (RSA) released their “Cash Census”, the first major study into the topic of cash reliance since the 2019 Access to Cash Review. The Cash Census found that the section of society that would feel left behind in a cashless society remains almost identical to that of the Access to Cash Review.35 We conducted a public survey on access to cash in Scotland, and the majority of respondents to our survey expressed negative views about the UK becoming a cashless society in the future. 67% said it would be “very negative”, and only 6% said it would be “very positive”.36
14. Richard Piggin—Head of External Affairs and Campaigns, Which?—told us that, since 2015, 53% of Scotland’s bank branches have closed and that the “percentage loss is greater than in any of the other UK nations”.37 He also told us that, since 2018, over 20% of Scotland’s free-to-use ATMs have closed.38 However, David Postings—Chief Executive, UK Finance—was clear that banks and ATM operators were “responding to consumer demand, which is dropping” and that “the commercial reality is that many bank branches just do not make sense any more”.39
15. The banks themselves also echoed Mr Postings’ claims, citing changing customer behaviours, lower footfall, and increased use of online banking as reasons for closing branches.40 For example, Carol Anderson—Branch Banking Director, TSB—told us that “more than 90% of transactions are now done digitally” and “some 75% of sales are done digitally”.41 The 2019 Access to Cash Review, however, raised concerns over the risk that continued innovation in digital payments could focus predominantly on the 80% who are “mainstream adopters”, without considering the 20% who may have more challenging needs and can less easily adapt to a society built on digital payments.42
16. Richard Piggin from Which? told us that the impact of bank branch and ATM closures can be most severe in remote and rural areas of Scotland due to challenges around connectivity and greater geographical distances to the next available location.43 When referring to Virgin Money branch closures, Debbie Hutchings—Regional Officer, Unite the Union—emphasised her concerns over the limited options for customers of Virgin Money. For example, the nearest alternative branch for customers of the closed Virgin Money branch in Portree is 80 miles away including a ferry transfer, and the nearest alternative for customers of the closed Wick branch is 101 miles away.44
17. David Postings, UK Finance, told us that cash access across the UK remains high, according to recent Financial Conduct Authority data:
95.5% of the population live within a mile and quarter of free cash access. Just under 100%—99.7%—live within three miles. Even in rural areas, the cash access is 98.3% within three miles.45
Richard Cooper—Executive Director, Marketing, Cardtronics—however, emphasised that, despite data indicating good cash access, the “lived experience of that is somewhat different”, when geographical access and the operating hours of cash services are taken into consideration.46
Cash usage and reliance
18. Despite a reduction in the number of people using cash, the 2019 Access to Cash Review outlined that some groups of people are more likely to depend on cash, such as those with lower incomes who use cash for budgeting reasons, and people in rural areas where digital payments may be harder due to challenges around digital connectivity.47 Age Scotland told us that “many older people, such as those on low and fixed incomes or a limited budget, prefer to use cash as a means of effective budgeting or because they are more comfortable with this form of payment”.48
19. Respondents to our public survey on access to cash in Scotland told us how frequently they use cash as a payment method. 48% of people told us that they “often” use cash to pay for goods and services, with 15% “almost always” using it, and only 4% never using cash.49
20. Another reason people may continue to use cash is for budgeting reasons. In March 2022, the Royal Society of Arts’ (RSA) Cash Census said that 15 million people in the UK use cash to budget. Additionally, 23 million said that cash helps them feel more in control of their finances, and 36 percent find it harder to track spending with non-cash payment methods.50 LINK also said that people may increasingly turn to cash for budgeting purposes, due to increases in the cost of living.51 In May 2022, Which? found that 52% of regular cash users said that it helps them to keep track of their spending, and 20% of those who do not regularly use cash said they would start to use cash if the cost of living were to increase.52 The Minister, John Glen MP, recognised the recent trend in the number of people choosing to use cash to budget, amid an increase in the cost of living.53
21. David Postings, UK Finance, said that “roughly 54% of people use mobile banking now, and about 72% bank online”.54 Age Scotland informed us that 140,000 adults in Scotland do not have a bank account and 34% of over 60s do not use the internet.55 Richard Piggin from Which? explained how poor broadband and poor mobile coverage can prevent people from using online banking, and highlighted a lack of digital skills as a potential reason behind the limited take-up of digital alternatives.56
22. We asked the Minister, John Glen MP, if he was aware of the number of people in Scotland who are reliant on cash.57 Minister John Glen MP informed us that the UK Government does not hold data on the use of cash in Scotland specifically, but that, following discussions with HM Treasury, LINK will commission new research into cash usage in Scotland over Summer 2022.58 The UK Government maintain the position that they will not intervene in the commercial process that leads to branch closures and the Minister said “it is not for me to make banks’ commercial decisions”.59
23. We recognise that the Government does not want to intervene in the detail of commercial decisions. However, we are concerned that a lack of data on cash usage in Scotland means Ministers have not had a clear picture of the implications of bank branch and ATM closures on communities in Scotland. We welcome the Minister’s recognition of the need for a more detailed picture of cash usage in Scotland, and it is important that this more detailed data be used to inform the Government’s legislative proposals.
Industry initiatives to protect access to cash
24. In December 2021, the Cash Action Group60 announced that LINK would independently assess the needs of “any community that faces the closure of a core cash service, such as a bank brank of ATM” and would “commission services to meet the cash needs of the community as a whole”.61 Minister John Glen MP, informed us via correspondence that LINK’s assessment process consists of three separate stages, and uses a weighted scoring system to assess whether a community is likely to need a new cash access service. Communities that need a new service, according to LINK’s assessment process, will receive a “suitable shared solution for all cash users in that community”, including the potential to receive a Banking Hub.62 (Banking Hubs are shared spaces, operated by the Post Office, with banks working jointly to offer basic cash services in communities that have lost most, or all, of their bank branches. Banking representatives are present on certain days of the week, but customers of the Hubs can deposit and withdraw cash when the Hubs are open.).63 In addition to shared Banking Hubs, communities may receive new free-to-use ATMs or enhanced Post Office services. Additionally, the Cash Action Group has announced that individual communities will be able to submit a request for LINK to review their community’s cash access needs from summer 2022 onwards.64 Adrian Roberts, LINK, also told us that, in small locations, cashback without having to make a purchase may be recommended as a shared solution.65 Minister John Glen MP said:
In light of these significant steps taken by industry to improve coordinated efforts by firms, the government’s planned legislation intends to enable HM Treasury to designate such industry coordination bodies for FCA oversight. As part of this the FCA will be able to use its powers to address deficiencies at a local level where they are resulting in significant adverse impacts on local communities.66
25. Richard Piggin from Which? praised the “really positive intervention from the banking industry” but emphasised that the voluntary initiatives “do not negate the need for Government legislation and the right regulatory oversight for some of this”.67 He also said that “it remains to be seen whether some of the really good proposals that we have seen from parts of the banking industry will work at scale or deliver an adequate provision of cash access to some of the communities that have been badly hit by bank branch and ATM closures”.68 Additionally, Richard Piggin told us how the Covid-19 pandemic “highlighted the fragility of the cash network”69 and of his concerns over the extended period of time that the UK Government took to produce legislation since committing to legislating to protect access to cash.70
26. We welcome recent initiatives announced by the Cash Action Group to ensure free access to cash in the absence of legislation. However, considering the scale of the population which remains reliant on cash, and likely will do so for the foreseeable future, this does not negate the vital need for legislation. While innovation in digital payments is welcome, Government action is required to ensure nobody is excluded from an increasingly digital economy.
27. We welcome the Government’s commitment to legislating to protect access to cash. However, we are disappointed about the extended period of time it took the UK Government to announce the legislation, considering the urgency of the issue. We look forward to seeing how specific safeguards to protect access to cash will be set out in the Financial Services and Markets Bill.
Cash acceptance
28. Richard Piggin from Which? told us that the Covid-19 pandemic increased the number of retailers refusing to accept cash as a form of payment, and instead encouraged contactless means of payment. Which? research found that towards the start of the first lockdown in 2020, one in ten consumers had encountered a retailer who was refusing to accept cash. Of those consumers, about a quarter were then unable to purchase the product as they did not have an alternative payment method.71 Martin Kearsley—Banking Director, Post Office—told us that “about 15% of consumers have not been able to get the services they want from their local retailers because those retailers do not take cash”.72
29. Reza Attar-Zadeh—Head of Customer Interactions, Santander—told us the Covid-19 pandemic “had an influence on accelerating digital adoption”73 and Carol Anderson—Branch Banking Director, TSB—added that “there was a 40% decline in the use of cash in the wider business community” during the Covid-19 pandemic.74 Richard Piggin from Which? also described how the Covid-19 pandemic influenced consumer behaviours and “has had some real benefits in terms of that transition to digital”.75
30. Age Scotland, however, noted that 140,000 adults in Scotland do not have a bank account, and said that the extraordinary circumstances of the Covid-19 pandemic should not result in radical changes in the way consumers purchase goods and services:
while the use of cash plummeted during national lockdowns and the huge reduction in economic activity, long-term decisions about the provision and acceptance of cash should not be made on the back of short-term trends.76
31. Additionally, some of the respondents to our public survey on access to cash expressed their concerns over the ability to pay for goods and services in the event of a technical issue or power outage if cash was not easily accessible to use or accepted as a payment method. In this context, a respondent specifically referred to the storms that caused disruption in early 2022.77 The continued need for a “non-digital payment method to act as a backstop for when digital banking systems fail” was also raised by Richard Piggin from Which?, who told us that “82% of Scottish consumers are likely to keep cash in case electronic payments are down”.78
32. Despite the reported increase in the number of retailers refusing to accept cash, Richard Piggin said there is currently “no publicly available information on the changes in terms of cash acceptance levels”.79 He suggested that the Financial Conduct Authority (FCA) could track and monitor changes in cash acceptance.80 Additionally, Richard Cooper from Cardtronics called for the Government to make cash acceptance a requirement for retailers.81 Both the Royal Society of Arts’ (RSA) Cash Census and 2019 Access to Cash Review recommended that cash remains widely accepted.82
33. Adrian Roberts, LINK, said that it must not be cost-prohibitive for businesses to accept cash, and that the creation of “local cash recycling cycles” can make it commercially viable. He referred to the recent introduction of cashback without purchase to encourage cash acceptance, which “allows retailers to give cash withdrawals from their till over the counter and to earn a small fee when doing so”.83 “Cash recycling” works by maintaining cash within a community and reducing the costs associated with transporting cash.84 Our predecessor Committee also investigated the UK cash network, and noted that cash recycling refers to cash that is:
used as change to other customers, distributed through onsite ATMs, or spent directly on stock or wages. After a period of time circulating in the local cash economy, notes are returned to an NCS [Note Circulation Scheme] cash centre.85
Cardtronics told our predecessor Committee that the introduction of deposit-taking ATMs, that are referred to later on in this report, would also support cash recycling within communities by reducing the fixed cost burden of processing cash.86 Additionally, Martin Kearsley from the Post Office told us that the Post Office supports the encouragement of retailers to accept cash, and that the Post Office network can provide a “secure and scalable” place for businesses to deposit their cash.87
34. The UK Government responded to an e-petition asking to “make it unlawful for shops to refuse cash payments” in April 2022 after it received almost 25,000 signatures. The Government said they do not plan to mandate cash acceptance and that it remains the choice of individual businesses whether to accept or decline any form of payment, including cash or card.88 Minister John Glen MP told us that “we will not mandate the use of cash” and highlighted that a Financial Conduct Authority (FCA) survey showed that “98% of businesses surveyed would not stop people from paying in cash”.89 He acknowledged that cash acceptance is a relevant issue to be concerned about, but that it remains the choice of individual businesses to decide what forms of payments to accept.90
35. The reported increase in the number of retailers refusing to accept cash could significantly inhibit the ability of people who either rely on cash, or choose to use it as their preferred payment method, to participate in the economy and access goods and services.
36. There seems to be limited general data in relation to businesses accepting cash as a means of payment. It would be helpful for us to know how much data the UK Government holds on this, particularly in the context of higher inflation and increases in the cost of living.
37. We believe the issue of cash acceptance in a retail setting requires further investigation. We recommend that the UK Government should consider asking the Financial Conduct Authority (FCA) to investigate and monitor cash acceptance levels across the UK. If the FCA find a substantial number of retailers refusing to accept cash, the UK Government should introduce additional protections to ensure that consumers reliant on cash are not disadvantaged.
Bank branch closures
38. According to the Office for National Statistics, the total number of bank and building society branches in the UK fell from 13,345 in 2012 to 8,810 in 2021, a fall of 4,535 or 34%. In Scotland, the decrease in the number of bank and building society branches was in line with the rest of the UK, at 34%, from 2012 to 2021.91 However, Richard Piggin from Which? told us that since 2015, “53% of Scotland’s bank branches have closed […] That percentage loss is greater than in any of the other UK nations”.92 He also described a slight and recent escalation of the rate of bank branch closures in Scotland: before 2021, around six branches a month were closing in Scotland, but in 2021, this increased to around eight a month.93
39. The Covid-19 pandemic may have accelerated the transition to digital, but we heard that many bank branch closures were planned before the pandemic.94 Fergus Murphy—Group Chief Customer Experience Officer, Virgin Money UK—told us that the Covid-19 pandemic did not accelerate bank branch closures, but continued the trend of fewer customers attending branches, and reduced the number of customers using cash.95 Ricky Diggins—Community Bank Business Delivery Director, Lloyds Banking Group—told us that Lloyds Banking Group paused bank branch closures through 2020, and explained that “we still have the same robust process in terms of writing to our customers, and working with and supporting vulnerable customers in exactly the same way was we would have done pre pandemic”.96
40. Since 2017, the major high street banks have been signed up to the Access to Banking Standard. This is an industry commitment designed to take steps to establish the local impact of a branch closure, and to inform communities about a bank’s reasons for closure and options for alternative access to services.97 The banks themselves explained how the Standard influenced their closure process, and Reza Attar-Zadeh, Santander, said “I think that the access to banking standard is very thorough in what it asks banks to consider in respect of any closure”.98 However, commenting on the effectiveness of the Standard, Richard Piggin from Which? said:
I think there is a genuine concern, simply because of the number of closures that have been announced, proposed and continued, as to whether that exercise has, in effect, made any significant changes to a bank’s approach.99
41. Debbie Hutchings, Unite the Union, echoed Which?’s concerns and called for greater scrutiny during the closure process.100 Ms Hutchings highlighted that the consultation process with customers of individual branches often occurs after the decision to close a branch has been made.101 In addition, Age UK said in their response to the UK Government’s Access to Cash Consultation that the “voluntary Access to Banking Standard has not had the desired impact on maintaining a branch presence in many communities across the country”.102
42. Referring to the Access to Banking Standard, Minister John Glen MP was clear that he had “defended the process by which they [bank branch closures] are overseen” and that “he had sought to improve it”, but, as noted above, he was clear that commercial decisions should not be made or influenced by the Government.103
43. Our predecessor Committee recommended that the UK Government “seek a commitment from banks that they will not close the last bank in town”.104 In its response to that recommendation, the UK Government said
it is vital that firms have the flexibility to respond to market trends and changes in customer behaviour, and decisions on a branch network must remain as commercial decisions for the banks themselves.105
The UK Government has given no indication that it will alter this approach. In March 2022, Lucy Frazer MP—Financial Secretary to the Treasury—said that the Government “cannot and should not seek to reverse the changes we are seeing in the market and in customer behaviour”.106 The Minister, John Glen MP, said that there was previously a policy under the coalition Government seeking to maintain “the last bank in town”, but observed that it was “completely unaffordable considering the speed of the decline in the use of cash”.107
44. Our predecessor Committee also investigated the potential for “banking hubs” to be established and recommended that the “Government …[be]… involved in the discussions between banks, so it can address competition and regulatory barriers to providing an expanded service”.108 Since our predecessor’s report, the Community Access to Cash Pilots trialled a range of cash access solutions in different communities. Banks and the Post Office tested a prototype shared Banking Hub, one of which was in Cambuslang. Of all the solutions trialled, the pilots found that Banking Hubs met the widest range of cash access needs.109 The Hubs are shared spaces, operated by the Post Office, offering face-to-face banking services, with banking representatives present on certain days of the week to offer help and assistance to customers. Customers of the Hubs can deposit and withdraw cash on any day that the Hub is open.110
45. Following the pilots, the Cash Action Group announced a new approach to managing bank branch and ATM closures, involving an independent assessment by LINK, and the commissioning of new shared solutions to enable communities to access cash. In addition to commissioning new free-to-use ATMs, or enhanced Post Office services, communities may receive a shared Banking Hub.111
46. The Minister, John Glen MP confirmed that the Cash Action Group had announced the establishment of a Banking Hub company that will oversee the rollout of Hubs recommended by LINK.112 John Glen MP also told us that:
the government also firmly believes that the impact of branch closures should be understood, considered, and mitigated where possible so that customers, wherever they live, continue to have appropriate access to banking services.113
In addition to noting guidance issued by the Financial Conduct Authority (FCA) in September 2020, Minister John Glen MP also highlighted the “best practice feedback” that was published in February 2022 that aims to give “firms greater clarity on FCA expectations with regards to the quality of analysis and consideration of customer needs”.114
47. We are of the opinion that the current rapid rate of bank branch closures may have come about as a result of banks rushing to close branches before legislation to protect access to cash and banking services can take effect. We are concerned that the existing mechanisms to analyse the needs of customers and ensure services are available are inadequate to prevent unnecessary closures. We expect the Financial Conduct Authority to carefully monitor the quality of the analysis used by banks to justify branch closures. Furthermore, while we do not expect the Government to intervene in genuine commercial decisions, we believe there is a case for action if banks are closing branches purely to pre-empt the legislative intent established in the Queen’s Speech.
3 ATM network
48. The ATM network across the UK, and Scotland specifically, has undergone substantial changes since our predecessor Committee investigated access to cash. Between July 2018 and July 2021, the number of ATMs in the UK fell by 12,968, or 20%.115 Richard Piggin—Head of External Affairs and Campaigns, Which?—told us that over 20% of Scotland’s free-to-use ATMs have closed since 2018.116 However, recent years have also seen an increase in the number of pay-to-use ATMs in the UK, with more than one in four ATMs charging people to make a withdrawal.117 However, Adrian Roberts—Chief Commercial Officer, LINK—told us that only 5% of withdrawals from ATMs are done via the pay-to-use network.118 Respondents to our public survey on access to cash told us how they usually withdraw cash, 71% said that they usually withdraw cash via an ATM.119
49. Adrian Roberts, LINK, told us that cash withdrawals from ATMs in Scotland have reduced by 52% since 2018. The average reduction across all UK regions and nations was 49%, but Scotland experienced one of the sharpest decreases across the UK.120 However, according to LINK, £1.5 billion is still being withdrawn from ATMs in the UK every week, but cash usage is not expected to return to pre-pandemic levels.121
50. Minister John Glen MP, told us that as of May 2022:
there are 4,655 ATMs in Scotland, of which 3,763 are free-to-use machines and 902 are pay-to-use machines. In May 2018, LINK reports that there were 5,903 ATMs in Scotland, of which 5,099 were free-to-use machines and 804 were pay-to-use machines.122
51. Referring to the recent reduction of free-to-use ATMs in Scotland, Adrian Roberts from LINK told us that LINK focuses on maintaining the geographic spread of ATMs, and that a reduction in the number of ATMs in a busy city centre may not impact consumers’ ability to access cash. He said that “ATMs in the most rural, remote, and deprived communities are the ones that we focus on to make sure that they don’t close, because they are the ones that have great value to the consumer”.123 However, Age Scotland informed us that people living in the most deprived areas “face significant financial penalties for withdrawing their own money” as there is a higher proportion of pay-to-use ATMs located in deprived areas.124
52. Our predecessor Committee considered the interchange fee,125 and how reductions in the interchange fee between 2018 and 2020 resulted in a significant reduction in ATM numbers.126 Richard Cooper—Executive Director, Marketing, Cardtronics—told us that independent ATM operators, such as Cardtronics, must either remove an ATM from a location or convert them to pay-to-use. He explained that changes to the interchange fee, in addition to reduced transactions via the ATM network, resulted in many free-to-use ATMs becoming unsustainable.127
53. LINK, the UK’s largest cash machine network, has been running their Financial Inclusion Programme since 2006, with the objective of improving free access to cash in the most deprived areas of the UK. LINK provides a higher rate of interchange to ATM operators who operate free-to-use ATMs in the most deprived areas in the UK.128
54. Adrian Roberts, LINK, told us that the Financial Inclusion Programme is “entirely dependent on voluntary membership” and that “having some legislation that puts mandatory participation around that would be really helpful”.129 Richard Cooper, Cardtronics, made the case for a “zonal interchange model” whereby ATMs in rural areas receive a higher rate of the interchange fee to promote free access to cash in areas that are currently underserved.130
55. Adrian Roberts, LINK, told us that the interchange fee—which is set by the LINK board—for a cash withdrawal is currently about 26p, whilst the interchange fee for a balance inquiry is about 17p.131 Adrian Roberts highlighted LINK’s zonal approach to the interchange fee noting that ATMs in the most rural areas, remote and deprived areas receive an interchange rate in excess of 10 times the standard rate and that there are “almost 400 ATMs in Scotland alone that receive enhanced interchange above those standard rates”.132
56. Our predecessor Committee concluded that the scope of the Financial Inclusion Programme was too narrow, and recommended that the Payment Systems Regulator (PSR) should “review the Financial Inclusion Programme and set out how it can encourage greater coverage of ATMs in the most rural, remote and deprived communities”.133 The Government response outlined that the PSR has used its powers to hold LINK to account over their public commitments to support free access to cash.134
57. HM Treasury published the Summary of Responses to the Access to Cash Consultation in May 2022, which set out the Government’s planned approach to legislating for access to cash. In the Financial Services and Markets Bill, there are provisions to establish the Financial Conduct Authority (FCA) as the lead regulator for retail cash access and to give to the FCA appropriate powers for ensuring that designated firms continue to provide both deposit and withdrawal facilities. Additionally, those powers would allow it to address cash access issues at both a national and local level.135 Minister John Glen MP, told us that, under the new legislation, the FCA will be working closely with LINK “which will be the interface for the public”.136 However, considering the pre-existing industry-led solutions in place, such as the Financial Inclusion Programme, it is currently unclear as to how the upcoming Financial Services and Markets Bill will interact with such mechanisms.
58. We welcome industry-led initiatives, such as LINK’s Financial Inclusion Programme, to provide free access to cash via free-to-use ATMs in the most rural and deprived areas of the UK. This is especially important in Scotland considering the physical and digital connectivity challenges it faces. However, it is unacceptable that an issue of such importance should be left to voluntary agreements which ultimately leaves them vulnerable and reduces certainty over the future of free access to cash in Scotland. Future legislation should therefore complement the industry-led initiatives, such as the Financial Inclusion Programme, and build on these to guarantee free access to cash for as long as it is needed.
59. We recommend that the UK Government should clarify their position on how the Financial Services and Markets Bill will interact with pre-existing industry-led solutions such as LINK’s Financial Inclusion Programme. Currently, LINK’s Financial Inclusion Programme is reliant on the voluntary membership of card issuers and ATM operators. We recommend that the UK Government consider legislating in the Financial Services and Markets Bill to mandate the membership of LINK for card issuers and ATM operators to ensure that the Financial Inclusion Programme can continue to provide free access to cash for as long as it is needed.
Deposit-taking ATMs
60. The 2019 Access to Cash Review proposed the introduction of deposit-taking ATMs. The ATMs, which accept both cash deposits and withdrawals, are currently limited to operating from within bank branches, and only for the bank’s own customers. The Review highlighted that it would be feasible to roll universal deposit-taking ATMs out across the UK, and that independent ATM operators are willing to start deploying the terminals, but they require the agreement of banks to proceed.137
61. Richard Cooper, Cardtronics, told us that deposit-taking ATMs would allow independent ATM operators to generate more revenue, which enables ATMs to remain operational for longer as cash usage declines.138 Richard Cooper emphasised that deposit-taking ATMs are “critical in terms of reducing the number of miles a note does in the cash cycle, but also increasing the availability of cash in the market”.139 We also heard about the important role that “cash recycling” can play in terms of retaining cash within a community and ensuring the cash system is sustainable.140
62. David Postings—Chief Executive, UK Finance—told us that UK Finance plan to investigate the ability for SMEs to deposit cash through ATMs. He highlighted barriers to introducing the infrastructure from an “anti-money laundering and ‘know your customer’ perspective”, but said that UK Finance are trying to deliver solutions.141 However, Minister John Glen MP, told us that he had “not had money laundering raised in the context of access-to-cash conversations”.142
63. In 2019, our predecessor Committee recommended that the UK Government should “set up a working group with industry to introduce network-wide deposit-taking ATMs”.143 The Government response stated that “there is potential for universal deposit taking ATMs to ease the burden of cash handling for SMEs and consumers” and that the Payment Systems Regulator [PSR] and Financial Conduct Authority [FCA] will continue to engage with industry on developments in cash deposit infrastructure. The response also said that HM Treasury will continue to monitor work associated with deposit-taking ATMs through the Joint Authority Cash Strategy (JACS) Group.144
64. However, we received correspondence from Cardtronics in January 2022 that highlighted the limited action taken by industry to introduce deposit-taking ATMs. Specifically, Cardtronics said that the FCA and PSR had not supported industry to introduce the infrastructure, and there has been “no clear collective effort by LINK to introduce this capability or develop a mechanism that would support them in the future”.145 Cardtronics recommended that the:
Government must recognise this impasse and introduce stronger requirements through legislation to drive the introduction of network-wide free-to-use deposit-taking ATMs that all bank customers can use.146
However, Adrian Roberts, LINK, told us that if the banks and regulators decide to introduce deposit-taking ATMs via the LINK network, then “LINK is very happy to progress on that basis”.147
65. Minister John Glen MP explained that he thought deposit-taking ATMs will be part of the access to cash solution for some, but not all, communities. He told us that the FCA will have to be “open to looking at that constructively”.148
66. Deposit-taking ATMs would provide a valuable service to consumers and SMEs in Scotland that have lost their bank branches, while assisting in the sustainability of the ATM network and the long-term provision of cash in Scotland.
67. Attempts to introduce deposit-taking ATMs for both consumers and SMEs have been constrained by a considerable lack of progress from both the banking industry and the UK Government. Considering the strength of the evidence to support their introduction, we repeat our predecessor Committee’s recommendation that the UK Government set up a working group with industry to introduce network-wide deposit-taking ATMs. The rapid rate of bank branch closures and the growing rate of fee-charging ATMs brings into sharp relief the necessity for deposit-taking ATMs to be introduced in areas of greatest need.
4 Post Office
68. Throughout our investigation, and our predecessor Committee’s inquiries, we were told that the Post Office was an alternative provider of banking services in the event of a bank branch closure.149 Fergus Murphy—Group Chief Customer Experience Officer, Virgin Money UK—told us that “over 90% of the activities that our customers do with us on a daily basis in a branch are available in the post office”.150
69. The Post Office do not see themselves as an alternative to a bank branch, and do not set out to be a direct alternative. Martin Kearsley—Banking Director, Post Office—told us that the Post Office provide “transactional services”, in terms of cash deposits and withdrawals for SMEs and consumers.151 However, the Post Office remain positive about offering services to customers who cannot access a local bank branch; Martin Kearsley from the Post Office said: “we have become even more of a collaborative and supportive partner to the banks” as they restructure their networks.152 He added:
We have seen more people coming into post offices. On my particular side, the banking side, we have certainly seen a massive increase in the amount of cash both coming in and going out, in Scotland in particular. In December ‘21, we had in excess of £60 million in cash withdrawals and we took in about £180 million in cash deposits, roughly split between personal deposits and small businesses. That really recognises the fact that, as the banks restructure their networks, we step in to support those communities.153
70. However, Richard Piggin—Head of External Affairs and Campaigns, Which?—emphasised that the Post Office should not be seen as a simple alternative to a bank branch or ATM.154 Debbie Hutchings—Regional Officer, Unite the Union—added that “we have to be mindful of what they [Post Offices] can do and what their capabilities are for simple transactions”.155 Our predecessor Committee reported concerns over the level of skills and expertise among Post Office staff, in addition to a lack of privacy.156 Furthermore, Richard Piggin from Which? identified concerns from consumers about the levels of privacy and long queues in post offices.157 Martin Kearsley, Post Office, recognised that certain transactions require privacy, and explained that the Post Office have protocols in place to assist with such transactions, and that they are looking to accommodate the need for greater privacy within the network.158 Minister John Glen MP, addressed the concerns over security and highlighted the Cash Action Group’s enhanced post office branches that may be introduced to communities following an independent assessment process by LINK.159
71. LINK’s “request an ATM” initiative allows communities to request additional cash access services. LINK will then investigate and potentially commission new services. Adrian Roberts—Chief Commercial Officer, LINK—told us that some of the cash access issues that had been reported by communities had been resolved by education. He told us that “a number of consumers we have spoken to didn’t know what they could do at a post office counter”.160 Martin Kearsley, Post Office, told us that awareness of Post Office banking services “currently rests somewhere between 55% and 60%”.161 Ricky Diggins—Community Bank Business Delivery Director, Lloyds Banking Group—told us that “about 21% of our current account customers use the Post Office on a regular basis”, and that in 2021 there were “almost 35 million transactions by Lloyds Banking Group through the Post Office, so there is good awareness”.162 However, Reza Attar-Zadeh—Head of Customer Interactions, Santander—told us that while the knowledge of Post Office banking services is high among business customers, personal customers can be less aware of Post Office banking services.163
72. The Post Office is required by UK Government policy to provide a minimum range of core Services of a General Economic Interest (SGEI), including access to cash and basic banking facilities.164 Post Office Ltd is accountable to the UK Government and must maintain at least 11,500 branches which are subject to six “access criteria”, including the requirement for 99% of the UK population to be within three miles, and 90% of the population to be within one mile, of their nearest Post Office outlet.165 Martin Kearsley from the Post Office said the Post Office works “very hard to make sure that every single postcode district in the country fits into those access criteria”.166
73. For more than a decade, the number of Post Offices in the UK has remained reasonably consistent. However, over the longer term—since the early 1980s—the number of post offices has almost halved.167 Martin Kearsley from the Post Office told us that the Post Office currently operates a network of about 11,580 branches in the UK, and that the network has “typically always been above 11,500”.168 As of March 2021, there were 1,321 Post Offices in Scotland, a decrease of 51 from February 2020. Between March 2011 and March 2021, Scotland lost 112 Post Offices to closure (a reduction of 7.8%). This represents the greatest percentage decrease across all UK nations and regions in that period.169
74. Since our predecessor Committee investigated access to cash, there have been various initiatives undertaken by the banking industry to improve provision of cash in local areas. In December 2021, the Cash Action Group announced that the Post Office will deliver enhanced cash services in up to 30 branches, to address local cash access issues.170 In addition to enhanced Post Office cash services, and new free-to-use ATMs, the Cash Action Group also announced the commissioning of shared Bank Hubs, operated by the Post Office and supported by banks, which offer some face-to-face banking services and the ability to deposit and withdraw cash on the days they are open.171
75. Consumers are only able to access cash at a Post Office if their bank has signed up to the Banking Framework Agreement. In January 2017, the Post Office signed the first instalment of the three-year Banking Framework Agreement to provide nearly all the large banks’ personal customers and most of their small business clients with face-to-face services, including depositing cash and cheques and reviewing balances.172 Banking Framework 2 started in January 2020, and will run until the end of 2022.173 The third instalment of the Banking Framework Agreement will start in January 2023, and means that consumers of 30 UK banks and building societies can continue to access cash and basic banking facilities via the Post Office until 2026.174
76. The Banking Framework is a voluntary agreement, with no statutory underpinning, that the Post Office itself has stated is fragile as “there is no obligation involved and this is simply a commercial agreement”.175 Martin Kearsley from the Post Office told us:
We run a very stable network of 11,500 branches. We know that it is fragile, as I am sure many of us will attest, and, based on commercial agreements only, can struggle.176
The Post Office, through their “Save Our Cash” campaign, have been calling for the UK Government to require banking partners “to make a long-term commitment to guarantee free access to cash services nationwide”.177 Which? have also raised concerns over the long-term viability of the Banking Framework Agreement, as it is both voluntary and time limited.178 Which? have called for the Banking Framework Agreement to be put on “firmer and more sustainable footing” in areas where local cash needs are not met.179 David Postings—Chief Executive, UK Finance—also highlighted the relatively short-term nature of the agreement with the Post Office to provide access to cash, and said “we hope we might be able to get longer-term deals”.180
77. Minister John Glen MP told us that the partnership between Post Offices and banks will always be a major part of access to cash provision, due to the universal network.181 He added that 99% of personal banking needs and 95% of business banking needs can be done through the Post Office network.182
78. The Post Office play a substantial role in the provision of free access to cash for communities across Scotland. We commend the positive action taken by both the banking industry and the Post Office to increase the availability of banking services in Post Offices in Scottish communities.
79. Despite the efforts taken by the banking industry and the Post Office, the current cash infrastructure is fragile, and the Banking Framework Agreement is ultimately short-term and voluntary. A decision by any of the major banks to withdraw from the agreement would have far-reaching consequences for millions of people and businesses that rely on cash. An issue of such importance should not be left to voluntary agreements.
80. Building on the structure and objectives of the Banking Framework Agreement, we recommend that the UK Government seek a long-term commitment from banks to maintain appropriate banking services for their customers using the Post Office network, to guarantee access to cash and basic banking services for all communities in Scotland.
Conclusions and recommendations
The role of cash in Scotland
1. We recognise that the Government does not want to intervene in the detail of commercial decisions. However, we are concerned that a lack of data on cash usage in Scotland means Ministers have not had a clear picture of the implications of bank branch and ATM closures on communities in Scotland. We welcome the Minister’s recognition of the need for a more detailed picture of cash usage in Scotland, and it is important that this more detailed data be used to inform the Government’s legislative proposals. (Paragraph 23)
2. We welcome recent initiatives announced by the Cash Action Group to ensure free access to cash in the absence of legislation. However, considering the scale of the population which remains reliant on cash, and likely will do so for the foreseeable future, this does not negate the vital need for legislation. While innovation in digital payments is welcome, Government action is required to ensure nobody is excluded from an increasingly digital economy. (Paragraph 26)
3. We welcome the Government’s commitment to legislating to protect access to cash. However, we are disappointed about the extended period of time it took the UK Government to announce the legislation, considering the urgency of the issue. We look forward to seeing how specific safeguards to protect access to cash will be set out in the Financial Services and Markets Bill. (Paragraph 27)
4. The reported increase in the number of retailers refusing to accept cash could significantly inhibit the ability of people who either rely on cash, or choose to use it as their preferred payment method, to participate in the economy and access goods and services. (Paragraph 35)
5. There seems to be limited general data in relation to businesses accepting cash as a means of payment. It would be helpful for us to know how much data the UK Government holds on this, particularly in the context of higher inflation and increases in the cost of living. (Paragraph 36)
6. We believe the issue of cash acceptance in a retail setting requires further investigation. We recommend that the UK Government should consider asking the Financial Conduct Authority (FCA) to investigate and monitor cash acceptance levels across the UK. If the FCA find a substantial number of retailers refusing to accept cash, the UK Government should introduce additional protections to ensure that consumers reliant on cash are not disadvantaged. (Paragraph 37)
7. We are of the opinion that the current rapid rate of bank branch closures may have come about as a result of banks rushing to close branches before legislation to protect access to cash and banking services can take effect. We are concerned that the existing mechanisms to analyse the needs of customers and ensure services are available are inadequate to prevent unnecessary closures. We expect the Financial Conduct Authority to carefully monitor the quality of the analysis used by banks to justify branch closures. Furthermore, while we do not expect the Government to intervene in genuine commercial decisions, we believe there is a case for action if banks are closing branches purely to pre-empt the legislative intent established in the Queen’s Speech. (Paragraph 47)
ATM network
8. We welcome industry-led initiatives, such as LINK’s Financial Inclusion Programme, to provide free access to cash via free-to-use ATMs in the most rural and deprived areas of the UK. This is especially important in Scotland considering the physical and digital connectivity challenges it faces. However, it is unacceptable that an issue of such importance should be left to voluntary agreements which ultimately leaves them vulnerable and reduces certainty over the future of free access to cash in Scotland. Future legislation should therefore complement the industry-led initiatives, such as the Financial Inclusion Programme, and build on these to guarantee free access to cash for as long as it is needed. (Paragraph 58)
9. We recommend that the UK Government should clarify their position on how the Financial Services and Markets Bill will interact with pre-existing industry-led solutions such as LINK’s Financial Inclusion Programme. Currently, LINK’s Financial Inclusion Programme is reliant on the voluntary membership of card issuers and ATM operators. We recommend that the UK Government consider legislating in the Financial Services and Markets Bill to mandate the membership of LINK for card issuers and ATM operators to ensure that the Financial Inclusion Programme can continue to provide free access to cash for as long as it is needed. (Paragraph 59)
10. Deposit-taking ATMs would provide a valuable service to consumers and SMEs in Scotland that have lost their bank branches, while assisting in the sustainability of the ATM network and the long-term provision of cash in Scotland. (Paragraph 66)
11. Attempts to introduce deposit-taking ATMs for both consumers and SMEs have been constrained by a considerable lack of progress from both the banking industry and the UK Government. Considering the strength of the evidence to support their introduction, we repeat our predecessor Committee’s recommendation that the UK Government set up a working group with industry to introduce network-wide deposit-taking ATMs. The rapid rate of bank branch closures and the growing rate of fee-charging ATMs brings into sharp relief the necessity for deposit-taking ATMs to be introduced in areas of greatest need. (Paragraph 67)
Post Office
12. The Post Office play a substantial role in the provision of free access to cash for communities across Scotland. We commend the positive action taken by both the banking industry and the Post Office to increase the availability of banking services in Post Offices in Scottish communities. (Paragraph 78)
13. Despite the efforts taken by the banking industry and the Post Office, the current cash infrastructure is fragile, and the Banking Framework Agreement is ultimately short-term and voluntary. A decision by any of the major banks to withdraw from the agreement would have far-reaching consequences for millions of people and businesses that rely on cash. An issue of such importance should not be left to voluntary agreements. (Paragraph 79)
14. Building on the structure and objectives of the Banking Framework Agreement, we recommend that the UK Government seek a long-term commitment from banks to maintain appropriate banking services for their customers using the Post Office network, to guarantee access to cash and basic banking services for all communities in Scotland. (Paragraph 80)
Appendix: Access to Cash in Scotland Survey
As part of our work, we ran a survey to get people’s views on access to cash in Scotland. The survey was open between 19 January 2022 and 9 February 2022. In total, 225 respondents completed the survey.
The people who responded to the survey were self-selecting and we did not collect any information about their identity. It would not be appropriate to use our data from the survey to make generalisations about people’s experiences and views on access to cash in Scotland. We found it hugely valuable to read about people’s experiences, and we thank them for taking the time to help us with our work. The results are summarised below.
Question 1
How frequently, if ever, do you make payments in cash?
Table 1: Responses to Question 1
|
Answer Choice |
Response Percent |
Response Total |
|
I never make payments in cash |
4% |
8 |
|
I almost never make payments in cash |
28% |
63 |
|
I often make payments in cash |
48% |
108 |
|
I almost always make payments in cash |
15% |
34 |
|
I only make payments in cash |
5% |
12 |
|
Answered |
225 |
|
Source: Scottish Affairs Committee Public Survey
Question 2
How do you usually withdraw cash?
Table 2: Responses to Question 2
|
Answer Choice |
Response Percent |
Response Total |
|
At an ATM/cash machine |
71% |
160 |
|
At the counter at a Post Office |
15% |
34 |
|
At a counter in the bank branch or building society |
8% |
19 |
|
By getting ‘cash back’ in shops |
4% |
9 |
|
Other |
1% |
3 |
|
Answered |
225 |
|
Source: Scottish Affairs Committee Public Survey
Question 3
In general, do you think it would be a positive or negative thing if the United Kingdom became a cashless society? This would mean only electronic forms of payment (such as credit and debit cards), and digital forms of payment (including Apple or Google Pay) would be accepted.
Table 3: Responses to Question 3
|
Answer Choice |
Response Percent |
Response Total |
|
Very positive |
6% |
14 |
|
Somewhat positive |
7% |
16 |
|
No difference |
2% |
4 |
|
Somewhat negative |
17% |
39 |
|
Very negative |
67% |
150 |
|
Don’t know |
1% |
2 |
|
Answered |
225 |
|
Source: Scottish Affairs Committee Public Survey
Question 4
We’re interested in hearing about how people in Scotland experience accessing their cash. What are your thoughts on the declining use of cash, and what impact does this have on your day-to-day life?
This is a summary of the key themes that emerged from the answers to Question 4, in addition to some relevant quotes:
Some people explained that they have had a positive experience with digital payment methods, highlighting greater convenience:
I have found myself using cash less and less over the years, the introduction of contactless payments with my card or with my phone through Apple Pay is so much more convenient for me personally.
However, many respondents noted that barriers to digital payments, such as restrictions with rural broadband and internet connectivity, can result in rural areas in Scotland being adversely affected:
Rural areas with poorer internet connectivity will be adversely affected by the loss of in person banking services and access to cash.
Some people highlighted the need for cash in the event of a technical issue or a power outage, for example those caused by the storms in early 2022:
Despite the rise in cashless payments, cash remains an important method of paying for goods and services within the community. […] I have been saved by cash on more than one occasion when, due to technical issues or power outages, digital payment could not be made. I believe it is very important for the public’s access to cash to be maintained, particularly in rural areas.
If we have a storm like we did this year and many places are without electricity for a week, how are you meant to buy anything?
Some people told us about their concerns over using card and contactless payments, due to security reasons. Meanwhile, some people voiced their concerns about the safety of ATMs in comparison to bank branches:
Card transactions might be risky since it’s easier to fall victim of bank fraud when using card.
We are an elderly couple living in a town which has lost all bank branches over the last 3 years making it difficult for my wife and I to access cash. We feel vulnerable using ATM machines in public places but have no real alternative as we pay a lot of small items in cash.
Some respondents emphasised that they choose to use cash for budgeting reasons:
Cash is easier to manage spending; I tend to withdraw and pay in cash to better manage my weekly spending after acquiring a lot of debt in my youth.
It’s important to have the option to pay in cash; I like to budget before buying stuff, but I’m finding it hard to do this, when I’m paying with card.
Some people told us of their concerns for people who don’t have bank accounts, access to technology, or sufficient digital skills. Some respondents also voiced their concerns about people with disabilities being left behind on the transition to digital:
Elderly people, like me, find [it] impossible to handle digital forms of payment and need cash to use in small shops, etc.
My disabled daughter is only able to deal with cash. She would be unable to deal with cashless payments and this would leave her open to financial abuse.
A recurring theme was concerns over travelling long distances to the nearest bank branch or cash access point:
Within this rural location, full time cash access is unavailable without necessitating a 20-mile round trip.
Some people told us that cash is required to make certain purchases, such as for small businesses:
Living in Rural Scotland there are still many small retail outlets that do not have card machines, so I think it is very important to have cash available.
Formal minutes
Tuesday 5 July 2022
Members present
Pete Wishart, in the Chair
Wendy Chamberlain
Sally-Ann Hart
John Lamont
Douglas Ross
Draft Report (Access to cash in Scotland), proposed by the Chair, brought up and read.
Ordered, That the draft Report be read a second time, paragraph by paragraph.
Paragraphs 1 to 80 read and agreed to.
Appendix and Summary agreed to.
Resolved, That the Report be the Second Report of the Committee to the House.
Ordered, That the Chair make the Report to the House.
Ordered, That embargoed copies of the Report be made available, in accordance with the provisions of Standing Order No. 134.
Adjournment
Adjourned till Monday 18 July 2022 at 2.30 p.m.
Witnesses
The following witnesses gave evidence. Transcripts can be viewed on the inquiry publications page of the Committee’s website.
Monday 17 January 2022
Richard Piggin, Head of External Affairs and Campaigns, Which?; Debbie Hutchings, Regional Officer, Unite the UnionQ1–35
Adrian Roberts, Chief Commercial Officer, LINK; David Postings, Chief Executive, UK Finance; Richard Cooper, Executive Director, Marketing, Cardtronics DivisionQ36–84
Monday 7 February 2022
Martin Kearsley, Banking Director, Post OfficeQ85–139
Fergus Murphy, Group Chief Customer Experience Officer, Virgin Money UK; Carol Anderson, Branch Banking Director, TSB; Reza Attar-Zadeh, Head of Customer Interactions, Santander UK; Ricky Diggins, Community Bank Business Delivery Director, Lloyds Banking GroupQ140–207
Monday 23 May 2022
John Glen MP, Minister of State (Economic Secretary), HM Treasury; Laura Mountford, Deputy Director - Payments and Fintech, HM TreasuryQ208–258
List of Reports from the Committee during the current Parliament
All publications from the Committee are available on the publications page of the Committee’s website.
Session 2022–23
|
Number |
Title |
Reference |
|
1st |
Defence in Scotland: military landscape |
HC 82 |
|
1st Special |
Immigration and Scotland: Government Response to the Committee’s Fourth Report of Session 2017–19 |
HC 84 |
|
2nd Special |
Airports in Scotland: Government Response to the Committee’s Fifth Report of Session 2021–22 |
HC 303 |
Session 2021–22
|
Number |
Title |
Reference |
|
1st |
Universities and Scotland |
HC 54 |
|
2nd |
Welfare policy in Scotland |
HC 55 |
|
3rd |
The UK Shared Prosperity Fund and Scotland |
HC 52 |
|
4th |
Renewable energy in Scotland |
HC 51 |
|
5th |
Airports in Scotland |
HC 601 |
|
1st Special |
Welfare policy in Scotland: UK and Scottish Government Responses to the Committee’s Second Report |
HC 790 |
|
2nd Special |
The UK Shared Prosperity Fund and Scotland: Government Response to the Committee’s Third Report |
HC 791 |
|
3rd Special |
Renewable energy in Scotland: Government Response to the Committee’s Fourth Report |
HC 901 |
|
4th Special |
Universities and Scotland: Government Response to the Committee’s First Report |
HC 1252 |
Session 2019–21
|
Number |
Title |
Reference |
|
1st |
Coronavirus and Scotland: Interim Report on Intergovernmental Working |
HC 314 |
|
2nd |
Coronavirus and Scotland |
HC 895 |
|
1st Special |
Problem drug use in Scotland: Government Response to the Committee’s First Report of Session 2019 |
HC 698 |
|
2nd Special |
Coronavirus and Scotland: Government Response to the Committee’s First and Second Reports |
HC 1118 |
Footnotes
4 UK Finance, UK Payments Markets Summary 2021, June 2021, page 4
5 Access to Cash Review, Final Report, March 2019, page 4
6 RSA, The cash census, 30 March 2022
8 UK Finance, The impact of Covid-19 on cash, accessed 31 May 2022; UK Finance, UK Payments Markets Summary 2021, June 2021, page 4
10 LINK, LINK research shows how cash habits have changed through the pandemic, 4 March 2022
11 Scottish Affairs Committee, Tenth Report of Session 2017–19, Access to Cash in Scotland, HC 1996, para 43
12 HM Treasury, Budget 2020, HC 121, March 2020, para 1.188
13 HM Treasury, Access to Cash: Call for Evidence and Summary of Responses, 15 October 2020
14 HM Treasury, Access to Cash Consultation, 1 July 2021
15 HM Treasury, Access to Cash: Consultation: Summary of Responses, May 2022
16 Explanatory Notes on Lords Amendments to the Financial Services Bill, Bill 287-EN, paras 10–11; HM Treasury, Access to Cash: Consultation: Summary of Responses, May 2022, page 2
17 Queen’s Speech 2022, Prime Minister’s Office, 10 May 2022, pages 55–56
18 HM Treasury, New law to protect access to cash announced in Queen’s speech, 10 May 2022
19 HM Treasury, New powers to protect access to cash, 19 May 2022
20 HM Treasury, Access to Cash: Consultation: Summary of Responses, May 2022, paras 4.6, 4.7; Q210
21 HM Treasury, Access to Cash: Consultation: Summary of Responses, May 2022, para 2.6
22 HM Treasury, Access to Cash: Consultation: Summary of Responses, May 2022, para 4.7
23 HM Treasury, Access to Cash: Consultation: Summary of Responses, May 2022, para 2.7
24 HM Treasury, Access to Cash: Consultation: Summary of Responses, May 2022, para 2.11
25 HM Treasury, Access to Cash: Consultation: Summary of Responses, May 2022, para 3.1
26 HM Treasury, Access to Cash: Consultation: Summary of Responses, May 2022, para 3.7; Q210
27 Scottish Affairs Committee, Third Report of Session 2017–19, Royal Bank of Scotland branch closures, HC 682
28 Oral evidence taken on 15 May 2018, HC (2017–19), 925
29 Scottish Affairs Committee, Tenth Report of Session 2017–19, Access to Cash in Scotland, HC 1996
30 Letter from Debbie Hutchings, Regional Officer, Unite the Union, on Virgin Money branch closures, dated 1 October 2021
31 The results of this survey can be seen in Appendix 1
32 HM Treasury, New powers to protect access to cash, 19 May 2022; Q210, Q236
33 Q40, this approximate statistic was calculated by dividing the total population of Scotland by the estimated number of people reliant on cash in Scotland, as reported by Adrian Roberts.
34 Access to Cash Review, Final Report, March 2019, page 4
35 The RSA, The cash census, 30 March 2022
36 The results of this survey can be seen in Appendix 1
42 Access to Cash Review, Final Report, March 2019, page 6
45 Q37; Source: Financial Conduct Authority, Access to cash coverage in the UK 2021 Q3, 23 February 2022
47 Access to Cash Review, Final Report, March 2019, pages 24, 73
48 Policy briefing from Age Scotland on Access to cash in Scotland, dated May 2022
49 The results of this survey can be seen in Appendix 1
50 The RSA, The cash census, 30 March 2022, pages 8, 32
51 The Independent, Half of people ‘still sing less cash than they were before pandemic’, 4 March 2022
52 The Independent, More people ‘could turn to cash to manage squeezed finances’, 6 May 2022
55 Policy briefing from Age Scotland on Access to cash in Scotland, dated May 2022
58 Letter from John Glen, Economic Secretary, HM Treasury, on the follow-up to access to cash; Q236
60 The Access to Cash Action Group (CAG) includes senior representatives from financial institutions with the largest networks, the Post Office, LINK, and leading consumer groups. Source: UK Finance, Banking industry commits to supporting customers who depend on cash, 13 May 2021
61 UK Finance, Pivotal moment as banks, consumer groups, Post Office and LINK join forces to help protect cash services, 15 December 2021
62 Letter from John Glen, Economic Secretary, HM Treasury, on the follow-up to access to cash
63 Q48, Q87, The Independent, Banking Hub company will help maintain access to cash, 17 February 2022
64 UK Finance, Pivotal moment as banks, consumer groups, Post Office and LINK join forces to help protect cash services, 15 December 2021
66 Letter from John Glen, Economic Secretary, HM Treasury, on the follow-up to access to cash
76 Policy briefing from Age Scotland on Access to cash in Scotland, dated May 2022
77 The results of this survey can be seen in Appendix 1
82 The RSA, The cash census, 30 March 2022, page 11; Access to Cash Review, Final Report, March 2019, page 116
85 Scottish Affairs Committee, Tenth Report of Session 2017–19, Access to Cash in Scotland, HC 1996, para 64
86 Scottish Affairs Committee, Tenth Report of Session 2017–19, Access to Cash in Scotland, HC 1996, para 30
88 Petitions, Make it unlawful for shops to refuse cash payments, accessed April 2022
91 Statistics on access to cash, bank branches and ATMs, Research Briefing CBP08570, House of Commons Library, 27 April 2022, page 11, page 13
97 Lending Standards Board, Access to Banking Standard, accessed June 2022
102 Age UK, Consultation Response - Access to Cash Consultation, September 2021
104 Scottish Affairs Committee, Tenth Report of Session 2017–19, Access to Cash in Scotland, HC 1996, para 43
105 Scottish Affairs Committee, Access to Cash in Scotland: Government Response to the Committee’s Tenth Report, Session 2017–19, HC 294, page 5
106 HC Deb, 16 March 2022, col 1007
108 Scottish Affairs Committee, Tenth Report of Session 2017–19, Access to Cash in Scotland, HC 1996, para 47
109 Community Access to Cash Pilots, Final Report, December 2021, page 54
111 UK Finance, Pivotal moment as banks, consumer groups, Post Office and LINK join forces to help protect cash services, 15 December 2021
112 Letter from John Glen, Economic Secretary, HM Treasury, on the follow-up to access to cash
113 Letter from John Glen, Economic Secretary, HM Treasury, on the follow-up to access to cash
114 Letter from John Glen, Economic Secretary, HM Treasury, on the follow-up to access to cash
115 Statistics on access to cash, bank branches and ATMs, Research Briefing CBP08570, House of Commons Library, 27 April 2022, page 18
117 Statistics on access to cash, bank branches and ATMs, Research Briefing CBP08570, House of Commons Library, 27 April 2022, page 16; Source: LINK Statistics and Trends, accessed June 2022
119 Results of this survey can be seen in Appendix 1
121 The Independent, Half of people ‘still using less cash than they were before pandemic’, 4 March 2022
122 Letter from John Glen, Economic Secretary, HM Treasury, on the follow-up to access to cash
124 Policy briefing from Age Scotland on Access to cash in Scotland, dated May 2022
125 The interchange fee is the amount banks pay to ATM deployers when customers withdraw money from an ATM that their bank doesn’t own. ATM operators may charge consumers to use their ATMs, in which case they cannot claim an interchange fee. If a customer uses their own bank’s ATM, then no interchange fee will be charged. Source: Payment Systems Regulator, The UK’s ATM Network, accessed June 2022
126 Scottish Affairs Committee, Tenth Report of Session 2017–19, Access to Cash in Scotland, HC 1996, paras 14, 15
128 LINK, LINK Financial Inclusion Programme, accessed May 2022
133 Scottish Affairs Committee, Tenth Report of Session 2017–19, Access to Cash in Scotland, HC 1996, para 28
134 Scottish Affairs Committee, Access to Cash in Scotland: Government Response to the Committee’s Tenth Report, Session 2017–19, HC 294, page 4
135 HM Treasury, Access to Cash: Consultation: Summary of Responses, May 2022, para 1.9
137 Access to Cash Review, Final Report, March 2019, page 86
140 Q58 [Adrian Roberts], Q59, Q61
143 Scottish Affairs Committee, Tenth Report of Session 2017–19, Access to Cash in Scotland, HC 1996, para 33
144 Scottish Affairs Committee, Access to Cash in Scotland: Government Response to the Committee’s Tenth Report, Session 2017–19, HC 294, page 4
145 Letter from Richard Cooper, Executive Director–Marketing, NCR, Cardtronics Division, on ATM infrastructure, dated 10 January 2022
146 Letter from Richard Cooper, Executive Director–Marketing, NCR, Cardtronics Division, on ATM infrastructure, dated 10 January 2022
149 Scottish Affairs Committee, Tenth Report of Session 2017–19, Access to Cash in Scotland, HC 1996, para 48
156 Scottish Affairs Committee, Tenth Report of Session 2017–19, Access to Cash in Scotland, HC 1996, para 50
159 Q254; UK Finance, Pivotal moment as banks, consumer groups, Post Office and LINK join forces to help protect cash services, 15 December 2021
163 Q161 [Reza Attar-Zadeh], Q197
165 Department for Business, Energy & Industrial Strategy, Government Response to the 2016 Post Office Network Consultation, December 2017, page 6, page 17
167 Post Office numbers, Research Briefing 02585, House of Commons Library, 21 February 2022, page 5
169 Statistics on access to cash, bank branches and ATMs, Research Briefing CBP08570, House of Commons Library, 27 April 2022, page 15
170 Which?, New access to cash solutions - are they enough, 15 December 2021
171 UK Finance, Pivotal moment as banks, consumer groups, Post Office and LINK join forces to help protect cash services, 15 December 2021, Q46 [David Postings]
172 Post Office, Banking agreement to continue for three more years, 8 October 2019
174 BBC News, Key Post Office deal agreed for future of cash, 31 January 2022
175 Post Office, Access to Cash #saveourcash, accessed June 2022
177 Post Office, Access to Cash #saveourcash, accessed June 2022
178 Which?, HMT Access to Cash: Call for Evidence - Which?, 25 November 2020
179 Which?, Which? response to HMT CP on access to cash, 22 September 2021