The vast majority of people and businesses are set to be no further than three miles from withdrawing cash under a new framework set out by the Treasury.

In a Government statement, the minimum expectations have been set on banks to protect services for people and businesses to withdraw or deposit cash, without being charged any fees. This is something that has been set out in law.

As part of the move, the Financial Conduct Authority (FCA) has been given new powers by the Government to protect the provision of cash access services. These powers include protecting cash access without any fees for those who hold personal accounts.

As it stands, the vast majority of people living in urban areas can access cash deposits and withdrawal services within one mile, with those in more rural areas have to travel around three miles in order to do so.

Whilst the country is moving away from using coins and paper money, with a rise in online payments increasing from 45% to 85% in the past decade, cash can still be integral to many businesses and people’s lives.

The Government has said that the FCA should use its powers to maintain this level of coverage, while recognising that needs may differ by location and change over time.

The statement also makes it clear that if a service is withdrawn and a replacement service is needed, this should be done so before the closure takes place.

Under the Financial Services and Markets Act 2023, the FCA is able to use its powers to make sure that banks and building societies are keeping up to these standards. If they are not upheld, the FCA has the power to fine the respective offenders.

Economic Secretary to the Treasury, Andrew Griffith, said: “Whilst the growing choice and convenience of digital payments is great, cash has an important and continuing role to play. That’s why we are taking action to protect access to cash in law and laying out that this means fee-free withdrawals and the availability of cash facilities within a reasonable distance.

“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.

“These are measures which benefit everyone who uses cash but particularly those living in rural areas, the elderly and those with disabilities.”

Senior personal finance analyst at interactive investor, Myron Jobson, added: “Most of us rely on the plastic and our smartphones to make payments, but many individuals, particularly those in rural or underserved areas, rely on cash for their daily transactions. Limiting access to cash could exclude these individuals from participating in the economy, making it difficult for them to buy necessities, pay bills, or conduct basic financial activities.

“Not everyone has access to digital payment systems or the necessary technology. Restricting access to cash could disproportionately affect lower-income households and people who don’t have or can’t use the internet or those who may not be comfortable or familiar with digital transactions.

“Having access to cash is also important when it comes to budgeting amid the cost-of-living crisis. Using physical cash to budget offers a tangible and visual representation of your spending limit, making it easier to track and control your expenses. This could reduce the risk of overspending since you're limited to the amount you withdraw. It's like a reality check, a tangible reminder of your financial boundaries.”

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