Shearman & Sterling LLP | FinReg | UK Government Proposes Measures to Protect Direct Access to Cash
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  • UK Government Proposes Measures to Protect Direct Access to Cash

    HM Treasury has opened a consultation on policy proposals for geographic access requirements upon designated firms to protect access to cash across the U.K. The consultation follows the Access to Cash: Call for Evidence, published in October 2020, which sought views on the considerations on how to maintain a sustainable network of retail cash infrastructure in the U.K. and support the use of cash by people and businesses over time. Responses to the consultation may be submitted until September 23, 2021.

    The main proposal is the introduction of geographic requirements based on cash access (e.g. ATM) facilities being available within maximum distances of a minimum percentage of the population. Geographic parameters are already used in cash provision - LINK's ATM scheme, for example, has committed to protecting free-to-use ATMs more than 1km away from the next nearest free-to-use source of cash and protecting free access to cash on high streets that do not have a free-to-use source of cash within 1 km. The Post Office Network is obliged to ensure that 99% of the total population must be within 3 miles of their nearest Post Office and 95% must be within 1 mile. HMT's proposals for designated firms would impose minimum requirements that ensure reasonable access to withdrawal and deposit facilities for individuals and reasonable access to deposit facilities for SMEs. The government does not intend to consider further factors, such as local needs, deprivation, vulnerability, and service levels, which will be for the industry to address. Flexibility would be built in to the legislative provisions to allow the government to adjust the requirements over time.

    HM Treasury notes that this policy approach follows that taken by other jurisdictions, such as Sweden, which has requirements for deposit and withdrawal facilities to be made available by selected financial institutions within a given distance of residences.

    Consideration is being given to allowing HM Treasury to set geographic requirements at different levels for Northern Ireland and Great Britain if appropriate.

    It is proposed that HM Treasury would have powers to designate the firms that would be subject to the cash access requirements, with the largest retail and banking providers being the starting place. Designation would be made in consultation with the U.K. Financial Conduct Authority and each firm. The factors taken into account would include the firms' geographic coverage, the distribution of the firms' consumers within the U.K. and the firms' shares of the U.K.'s payment account market. Designated firms would only be required to meet SME depositing cash access requirements where they provide payment account products for business customers.

    The FCA, which would be the lead regulator, would have responsibility for the monitoring and enforcement of the cash access requirement. It would also be given statutory responsibilities for ensuring that cash access points provide "reasonable access" for cash users to qualify for meeting geographic requirements. The FCA would be expected to make rules on "reasonable access," which would consider factors such as the appropriateness of facilities for vulnerable users, security, hours of availability and accessibility.

    Since the end of June, the provision of cashback without a purchase has become a non-regulated activity. Previously, retailers had to be authorized or registered by the FCA or act as an agent of a payment service provider to do so. These changes were implemented through the Financial Services Act 2021.

    View HM Treasury's consultation on access to cash.

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