The government has set out proposals to protect the future of the UK’s cash system and ensure that people have easy to access to cash when they need it.
This comes after a tough year for cash. COVID-19 has seen many shops and services switch to card-only payments due to fears that cash can spread the virus, leaving vulnerable people with no way to pay.
Bank branch closures, too, threaten people’s access to cash, with TSB planning to close 164 of its branches in 2021 and Co-operative Bank shuttering 18 branches by the end of the year.
Here, we explain the government’s proposals and why Which? is campaigning for the government to protect access to cash now and in the future.
What’s the government’s plan for cash?
Chancellor Rishi Sunak committed to introducing new laws that would protect the use of cash in the Budget earlier this year.
He quickly began talks with the industry and regulators, including the Bank of England, the Financial Conduct Authority (FCA) and the Payment Systems Regulator.
The first of this group’s proposals would see cashback offered at local shops of all sizes, without the need for customers to purchase anything. This has previously been prohibited under EU law but, if approved, could come into force when the Brexit transition period ends on 31 December.
It’s also proposing to give the FCA overall responsibility for the UK’s retail cash system, ensuring individuals, as well as small and medium-sized businesses, can benefit from the cash system.
The government will seek views on its proposals for the next six weeks, after which point new rules may be introduced.
- Find out more: Government commits to protecting access to cash
Which?’s Freedom to Pay campaign
Our research shows that many people are still reliant on cash, whether that’s because they can’t use mobile or internet banking, or their local retailers only accept cash.
Those over the age of 65 and vulnerable people are the most likely to need to use cash – and, particularly during the pandemic, it has proved a vital way of being able to pay people for help such as picking up groceries if they can’t get to the shops themselves.
Which? is therefore calling on the government to find a way for people who rely on cash, some of whom don’t have a bank card, to pay for essentials.
Gareth Shaw, Head of Money at Which?, said: ‘The government made a commitment to protect access to cash in the last Budget, so it’s positive it is now taking steps towards legislation, of which cashback without purchase is one part.
‘We are strongly supportive of the FCA taking responsibility for protecting cash, as current oversight of the cash system is fragmented with no one body accountable.
‘While legislation protecting access is key, it risks being undermined if people cannot spend cash on the things they need. In its new role, the FCA should also look at the problem of cash acceptance.’
- Find out more: join the Which? Freedom to Pay campaign
What can I do if my local bank branch is closing?
As time goes on, an increasing number of people will find it more difficult to access a nearby bank branch – but there are things you can do.
Firstly, consider switching your bank if there are still other banks’ branches local to you. Switching your current account has been made much easier in recent years, as our guide explains.
You can also carry out some basic banking tasks at the Post Office, such as depositing or withdrawing cash. Many banks now allow you to pay in cheques to the Post Office, or virtually via your mobile phone.
Lastly, if you’re happy to bank online, by phone or app, you’ll be able to access a much wider range of banks – you can find out more in our guide to the best and worst banks.
source https://www.which.co.uk/news/2020/10/government-reveals-proposals-on-how-it-will-protect-the-future-of-cash/