Access to cash in Scotland – Report Summary

Summary

Scotland has experienced a rapid decrease in banking infrastructure in recent years, 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. In 2009, 56% of transactions were in cash, but today cash payments represent only 17% of all transactions. Despite this, cash remains the second most frequently used form of payment, second only to debit cards. Currently, 5.4 million people, or about 10% of adults in the UK, are reliant on cash. In Scotland, approximately 500,000 people are reliant on cash.

The 2019 Access to Cash Review highlighted that the UK is not ready to go cashless, and that over 8 million adults would struggle to cope in a cashless society. 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.

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. Cash usage has recently returned, but it is not expected to return to pre-pandemic levels.

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.

Since our predecessor Committee investigated access to cash, the UK Government committed to legislation that will protect access to cash. The Financial Services and Markets Bill contains provisions to ensure people across the UK can continue to be able to access their own cash. This is a positive response to the work of our predecessor Committee, and reflects the frequency that the issue has been raised in Parliament.

Our first recommendation centred around cash acceptance levels across the UK. The UK Government has said they will not mandate cash acceptance, despite there having been a recently reported rise in the number of retailers refusing to accept cash. We recommended that the UK Government should consider asking the Financial Conduct Authority (FCA) to investigate and monitor cash acceptance levels across the UK.

We commend the positive action taken by the banking industry to protect access to cash, however we were concerned to hear that such efforts are reliant on voluntary membership, of LINK for example. We recommended that the UK Government mandate membership of ATM operators and card issuers to LINK to ensure that LINK’s Financial Inclusion Programme can continue.

The introduction of network-wide deposit-taking ATMs would provide a vital service to both consumers and businesses. We recommended that the UK Government set up a working group to introduce the infrastructure.

Our final recommendation centred around the Post Office. We heard about the positive efforts taken by both the Post Office and the banking industry to ensure consumers and businesses can access basic banking services. However, it is clear that an issue of such importance should not be reliant on short-term, voluntary agreements. We recommended that the UK Government seek a long-term commitment from banks to maintain appropriate banking services for their customers using the Post Office network.