Despite the flight to digital platforms, FinTech, online banking, and mobile apps during the pandemic, the UK government has pledged to protect access to cash. That’s according to John Glen, Economic Secretary to the Treasury.
Speaking online at a Which? Cash Summit this week, Glen acknowledged that 70 percent of respondents to the Bank of England’s consumer survey in January said they were using less cash than before the pandemic.
That’s no surprise after months of lockdown and closed non-essential shops; however, the key figure is the 48 percent who said they could manage for extended periods without any cash at all, up from 32 percent before the pandemic.
Protecting access to cash remains a key issue, particularly for the estimated 1.3 million adults in the UK who are ‘unbanked’ – lacking in basic banking facilities – and for the many who remain uncomfortable with digital solutions.
Glen said, “While some of us have moved to newer types of payment, there is still an important role for cash. That’s why in last year’s Budget, the Government committed to legislating to protect cash for those who need it most. Of course, just five days after we made that announcement, we went into the first lockdown.
“We knew straight away that we needed to take immediate action to safeguard cash access and supply. That meant working closely with our financial regulators and the industry to make sure essential banking services were open to those who needed them, while customers and staff stayed safe.”
Safeguarding the UK’s cash supply and access to it has been a major focus for the Treasury over the past year, he said. But alongside those efforts, it has been working on long-term legislation that will enable the government to fulfil its commitment to protect cash – work that remains ongoing, he said.
A recent change was the government’s move to make it easier for shops and other businesses to offer cashback to customers, without those customers having to buy any goods.
“Previously, under legislation derived from EU regulations, merchants that wanted to offer this cashback service would have to be authorised by or registered with the Financial Conduct Authority,” he said.
“However, the new measure, which will come into force from June, removes this requirement and with it a potentially significant burden for many businesses, especially small shops.”
Meanwhile, the Community Access for Cash Pilots were launched in April with the support of banks, consumer groups and small businesses.
Glen said, “The scheme includes some very interesting projects. For instance, people living in Rochford, in Essex, and Cambuslang near Glasgow are benefiting from Post Office banking hubs – dedicated high street spaces, which combine cash facilities with retail banking services.
“It’s very good to hear about these projects’ warm reception because this is exactly the kind of fresh thinking we want to see. And it’s really positive to see that industry is being proactive on this issue; just this morning UK Finance has published an update on further work that its members will be undertaking to ensure cash is protected.”
As to the government’s commitment to the future of cash, Glen talked about the wholesale cash network – centres that are integral to the sorting, storing, and distribution of coins and notes.
“Obviously, as cash use declines, we need to work together to ensure this network is fit for the future,” he continued.
“That’s why the Bank of England brought together the industry to help design a new model for the network. And we welcome the progress on this work so far and look forward to seeing further steps this summer.
“Alongside this, the Government will continue to work closely with the Bank to ensure it has the powers it needs to keep this network sustainable and resilient into the future.”
Glen announced a consultation on the government’s legislative proposals to protect cash, which will be launched later in the summer.
“Our approach focuses on making sure we find the balance between supporting the use of cash by individuals and businesses, while allowing flexibility in terms of how this is achieved as the cash landscape continues to evolve.
“Therefore, we’re going to be setting out proposals for establishing requirements that ensure people and businesses can access cash withdrawal and depositing facilities, over time, within reasonable travel distances.
“As you’ll be aware, at present, industry, notably banks, plays a key role in ensuring these facilities are available, whether through branches, or by funding customer transactions at ATMs or Post Office counters. And we expect them to continue to do so under our approach.
“Our consultation will therefore set out proposals on which organisations should be in scope of the legislation. And the consultation will also cover the role of regulatory oversight.”