The government is facing calls for a new regulator to protect consumers’ access to cash, following several bank IT failures and thousands of cash machine and branch closures across the UK.
The consumer group Which? said cash is still a necessity for more than 25 million people in the UK. It also noted the combined closures of cash machines and branches have left people struggling to pay for essential goods and services.
The charity is campaigning for the creation of a regulator with sole responsibility for cash infrastructure, which ensures continued access to physical money.
Jenni Allen, the managing director for Which? Money, said: “We have serious concerns that the alarming rate of cashpoint and bank branch closures risks leaving people facing an uphill battle to access the cash they rely on.
“Cash is also a vital backup as fallible digital payments grow in popularity. So the government must appoint a regulator to oversee these changes and ensure no one is excluded and left struggling to go about their daily lives.”
About two-thirds of the UK’s bank branches have closed in the past 30 years. Of these, about 3,300 have shut since 2015 alone. This has left one-fifth of households more than two miles from their nearest bank.
Which? also published figures showing the UK lost nearly 3,000 cash machines in the six months to December, a rate of about 488 a month. This includes 250 free-to-use machines.
Over the whole of 2018, 102 protected machines, which receive additional subsidies from major banks to help keep them running, closed in remote areas.
Which? said that despite the rise in digital payments, there was still a “real appetite” for cash, with 73% of the population frequently using it to pay for goods and services.
Cash machine withdrawals in London and the south-east fell by 8.5% and 7.7% respectively last year, but the decline has been more gradual in areas such as Northern Ireland, where the drop was 2.1%. The move away from cash in the north-west, Scotland and Wales has also been slower, at 3.3%.
Although there has been a notable takeup in online banking, Which? highlighted that digital and card payments have been vulnerable to IT failures.
“Recent analysis has found that leading banks are suffering at least one major security or IT glitch per week, with outages of Visa payments and IT failures across a vast number of UK banks, including the prolonged issues at TSB, which have caused chaos for millions of customers,” it said.
“Which? is concerned that people will be left vulnerable without a non-digital payment alternative as access to cash declines across the UK.”
The Treasury select committee has launched an inquiry into banking IT failures, although evidence sessions are still pending.
The government stopped short of supporting calls for a cash protection regulator and said the Payment Systems Regulator is already “closely monitoring developments within ATM provision”.
A Treasury spokesman said: “Technology has transformed banking for millions of people, making it easier and quicker to carry out financial transactions and pay for services. This is to be welcomed, but we also recognise the continued importance of cash, especially for more vulnerable people.
“While the decision to close bank branches is a commercial decision, we understand the impact it can have on communities. Banks must now give customers as much notice as possible when a branch is closing, and ensure they are made aware of the options they have locally to continue to access banking services.”