Emergency measures launched to stem tsunami of cash machine closures during Covid-19

People must be told at least 12 weeks in advance if they are to lose their local cash machine under new guidelines amid concerns so many are being lost because of Covid-19.

The financial watchdog has fired a warning shot against banks, which have removed thousands of cash points in the past few years, and said they must give customers three months’ notice before removing one. Lenders will also have to consider alternatives so communities can continue having access to cash, according to new proposals outlined by the Financial Conduct Authority.

This could include sharing hole-in-the-walls with other banks or providing mobile banking hubs or cash delivery services.

Laura Suter, of stock broker AJ Bell, said: “People still reliant on cash have faced ever-decreasing options as bank branches and cash machines have been shut in their droves in recent years. Some areas of the country have been left as a cash desert, with people having to drive miles in order to  get cash out – not an option for the oldest or most vulnerable in society.”

In total more than 3,500 branches have closed over the past five years, a process which has been accelerated as banks look to cut down costs during the coronavirus crisis.

The Telegraph recently reported that one in eight banks and cash points had shut down during the pandemic due to staff shortages, social distancing and falling demand for cash. This is in spite of the fact that more than one in 10 adults are still reliant on physical money, according to research by the FCA.

The Government is preparing new laws to ensure that no community will be left without access to cash. Banks have been told they will have to provide free-to-use machines within a reasonable distance of every home in the country.

Sheldon Mills, of the financial watchdog, said: “Access to cash is a priority for the FCA. While in the recent climate we have seen some consumers move to digital payments, we have also seen the importance of the continued availability of cash to many consumers, including those most vulnerable.”

A spokesman for UK Finance, the banking trade body, said: “Bank branches and cash points play an important role in the life of local communities and decisions to close them are never taken lightly.”

She said it was working with communities to ensure continued access to cash and that the FCA’s proposals built on existing processes that firms already followed.