Banks could face fines if people can't access cash within 3 miles

Banks and building societies that fail to provide free cash services within three miles of customers could face fines under new rules.

This forms part of a new law which came into force in June, ensuring people can continue to conveniently withdraw and deposit cash following the rapid rate of bank branch and ATM closures.

Here, we explain what the new rules mean for customers and what measures are in place to protect access to cash.  

New minimum distances for cash services

In a policy statement released by the Treasury today, the government set out the minimum distances for free cash withdrawals and deposits. This forms part of the Financial Services and Markets legislation, which became law in June. 

It said the vast majority of those who live in urban areas will have access to free cash withdrawal and deposit services within one mile of where they live.

Those in rural areas can expect the same services within three miles of where they live. 

If a service is withdrawn and a replacement service is needed, this should be put in place before the closure takes place. 

The Treasury said the distances were chosen to maintain the current level of coverage of cash services, including ATMs and face-to-face services. 

Economic Secretary to the Treasury Andrew Griffith added: ‘People shouldn’t have to trek for hours to withdraw a tenner to put in someone’s birthday card – nor should businesses have to travel large distances to deposit cash takings.’

• Find out more: new rules to protect cash access and scam victims become law 

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Banks and building societies could face fines 

These measures will be monitored and enforced by the Financial Conduct Authority (FCA), which was given new powers in the Financial Service and Markets legislation. 

The FCA can now make sure banks and building societies are keeping up to these standards, and has the power to fine them if they do not.

In addition to the minimum distances, the FCA will also consider factors such as the opening hours and distance to cash services, as well as the need for in-person assistance.

The regulator will now consult on how to implement the new rules and expects they will come into force next summer.

• Find out more: what are the rules on paying with cash?

What is the Financial Services and Markets legislation?

The legislation ensures a minimum level of free access to cash.

The legislation was first committed to in the Queen's Speech in 2022, and aims to 'strengthen the United Kingdom's financial services industry, ensuring that it continues to act in the interest of all people and communities'. 

Which? worked tirelessly on the bill as it made its way through parliament to ensure it remained as strong as possible and successfully campaigned for the government to introduce an amendment on free access to cash.

The amendment ensured that people could withdraw and deposit cash for free, which means the FCA has greater power over major banks and building society to ensure reasonable free access to cash is preserved for those who need it.

• Find out more:Which? wins campaign to protect free access to cash

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Why does access to cash need protecting?

Link, the UK’s largest cash machine network, estimates 5.4 million adults rely on cash in their day-to-day lives. 

Yet 14,400 free-to-use ATMS in the UK have been lost since 2018, leaving many areas across the UK with particularly poor access to cash.

On top of this, Which? analysis has found almost half of the UK’s bank branch network has closed since 2015.

Banks and building societies have closed (or scheduled the closure of) 5,847 branches since January 2015, at a rate of around 54 each month.

• Find out more:bank branch closures: is your local bank closing? 

‘FCA must be ready to take strong action’

In response to the new guidelines published by the treasury, Jenny Ross, editor of Which? Money said: ‘It's good to see the government moving quickly and issuing guidance for banks to follow, and the Financial Conduct Authority must be ready to take strong action against firms that fall short of the required standards.

‘Setting distances from cash facilities is the simplest approach to ensuring a minimum availability of free access to cash, but the FCA must monitor and be ready to respond to specific issues which may arise in local communities.’