The financial services regulator is to be given new powers to protect access to cash, the government has confirmed.
Banks and building societies will be subject to Financial Conduct Authority (FCA) powers to help ensure financial inclusion.
In the Queen’s Speech last week, the government promised that access to cash would be protected through the Financial Services and Markets Bill.
The government has confirmed that the FCA’s new power to ensure communities have cash withdrawal and deposit facilities will feature in the legislation.
To support the FCA, the government said it will in due course set out its expectations for a reasonable distance for people to travel when depositing and withdrawing cash.
This will reflect the existing spread of cash withdrawal and deposit facilities in the UK, it added.
It is thought that about 5.4 million adults rely on cash to a great extent or very great extent in their daily lives.
For many people, using cash helps them to budget – Consumer group Which? found that 52% of regular cash users said it helps them keep track of their spending and 20% who do not use cash regularly said they would start if the cost of living crisis worsened.
But Which? also found last week that 4,685 bank branches have closed since 2015 and 12,178 free-to-use ATMs have been axed since 2018.
Economic Secretary John Glen, who was visiting Scotland on Thursday, said: “Millions of people across the UK still rely on cash, particularly those in vulnerable groups, and today we are delivering on our promise to ensure that access to cash is protected in communities across the country.
“I want to make sure that people are still able to use cash as part of their daily lives, and it’s crucial to ensure that no person nor community across the UK is left behind as we embrace a more digital world.”
At the time of the Queen’s Speech announcement, Natalie Ceeney, chair of Access to Cash Review and Cash Action Group described it as a “huge step forwards”.
“I applaud the government for this commitment to supporting some of the most vulnerable people in society, as well as small businesses.
“A lot of great work has been done over the past couple of years by the banking industry and with this legislation, we can shift the conversation from whether we can protect cash to how we can best meet the needs of those who need it.”
Philip Bowcock, chief executive of ATM provider NoteMachine, said: “The way ATMs are funded must be addressed as part of the legislation to ensure a long-term future for the free-to-use cash network.
“The focus on geographic requirements within the access to cash legislation must also be properly thought through – setting an ‘as the crow flies’ radius will make no real difference to consumers unless ease of accessibility is the primary consideration.”