Which? report highlights bank closures and loss of free ATMs

Research by Which? has found nearly a quarter of free-to-use ATMs in the UK have vanished since 2018 and almost half of bank branches have been earmarked for closure since 2015.

It identified 17 parliamentary constituencies, accounting for more than 1.5 million people, that have particularly poor access to cash – with three or fewer bank branches and 30 or fewer free-to-use ATMs.

Among those constituencies are three in Wales, Clwyd South; Carmarthen East and Dinefwr; and Gower.

Carmarthen East and Dinefwr has lost 13 out of 15 bank branches since 2015, and has a relatively high proportion of elderly residents, Which? said.

People who rely on cash for budgeting are also disadvantaged by the withdrawal of free to use ATMs, the authors have warned.

People aged 65 and over make up around a quarter (23 per cent) on average of the population across the 17 constituencies that Which? said have poor access to cash.

The UK Government has previously said it will legislate to protect the future of cash, and Which? is calling for this to happen in the Queen’s speech next month.

The consumer champion also sent a letter to the Treasury on Monday which says: “With rising living costs placing additional pressure on people’s personal finances, the consequences of being unable to withdraw cash for those consumers who already rely on it could be significant.”

The letter continues: “Unless legislation is introduced urgently, the ability to access, spend and deposit cash could be permanently lost for many consumers, leaving some of society’s most disadvantaged at risk of financial exclusion with no way to pay for the goods and services they need in their daily lives.”

The letter is also backed by other organisations including Age UK, Fairer Finance, the British Retail Consortium (BRC), StepChange Debt Charity, the Money and Mental Health Policy Institute, and the Federation of Small Businesses (FSB).

FSB national chair Martin McTague, who sits on the Access to Cash Pilots Board, said: “This Queen’s speech is the last chance saloon where protecting access to cash is concerned.”

In Crickhowell, in Powys, there are just two cash machines for a town with a population of just over 2,000 while its bank branch closed in March 2017 which also menat the loss of a cash machine.

However one ATM is only available during the opening hours of the local post office.

Despite this it has a thriving retail sector. Chloe Masefield who runs zero waste shop Natural Weigh on High Street, which was named the best in Britain in 2018, said access to cash is a concern.

But she has found customers are increasingly using cards, even for smaller purchases.

"Since we opened four years ago, we have had issues with our card machine a handful of times. In these instances, we rely on customers being able to go and take out cash to pay for their goods, otherwise we are unable to do business. On the whole, customers are very understanding so it hasn't been a massive issue for us.

"We get an equal proportion of visitors and locals who use cash or choose to pay by card, even for purchases under £1.

"I think everywhere in town where you would want to buy something you can use a card now."

A retail worker in the town, who did not want to give her name, said she has found herself having to buy additional items if a retailer has a minimum charge and that people can have to make a six mile journey to Abergavenny to visit a bank or even a cash machine if either of two in town are unavailable for some reason.

"You get older people who have to catch a bus all the way to Aber' or there is a mobile bank that comes to the car park once a week," the woman, who said she is often asked by customers where they can get cash, said.

A Treasury spokesperson said: “We know that cash remains vital for millions of people and we are committed to protecting access to cash across the UK.

“That’s why we have consulted on plans for new laws to make sure people only need to travel a reasonable distance to pay in or take out cash, and have already legislated to enable shops to offer cashback to customers without them having to make a purchase.

“We have considered responses to the consultation and will set out next steps in due course.”

Which? said since 2015, 4,685 bank branches have shut their doors, with a further 226 already scheduled to close by the end of the year. It said this equates to nearly half of the network.

The consumer group found the rate of branch closures in rural areas has outstripped those in urban areas. Since 2015, the banking network in rural constituencies has been cut by half (50.7%), compared with 47.3% in urban areas.

It said the deterioration of the UK’s ATM network, including free-to-use cash machines, has compounded the problem.

Since 2018, 12,178 free-to-use ATMs have been cut, which is equivalent to nearly a quarter of free cash machines, the consumer group added.

Cash machines can charge people up to £2 to withdraw their own money and a reduction in the fee paid by banks to operators has been identified as one of the reasons behind the loss of free to use machines, along with more people using contactless payments or payments in shops using mobile phone technology.

Jenny Ross, Which? Money editor, said: “It really is now or never to halt the cash crisis.

“Though banking industry proposals for action are welcome, what’s needed most is the legislation promised by the Government to protect cash. This should also include making the FCA (Financial Conduct Authority) the key regulator to protect cash services.”

The Post Office helps to fill gaps in the cash system. It has an agreement with many banks which allows the banks’ customers to do their day-to-day banking over post office counters.

Ross Borkett, head of banking at the Post Office, said: “In many places across the country, Post Office is providing the last counter in town where people can access cash.”

He added: “Our postmasters continue to provide convenient and secure access to cash services, helping to protect cash and supporting local communities and businesses.”

John Howells, CEO of ATM network Link said legislation is required to ensure people have free access to cash.

He acknowledged cash usage has fallen by around 40 per cent since the start of the pandemic but warned: "While today, over 99 per cent of high streets have free access to cash via either a nearby ATM or Post Office, as ATM numbers continue to fall, legislation is needed now to move the voluntary commitments of industry into a more formal and regulated arrangement.”

A UK Finance spokesperson said: “While cash use has declined, it still remains the second most common payment method behind debit cards and the banking and finance industry has committed to ensuring there is continued access to cash for those who need it, when they need it.

“Recent research from the Financial Conduct Authority found that the vast majority of people continue to have free access to cash locally.

“In December 2021, the Access to Cash Action Group (CAG), chaired by Natalie Ceeney, set out plans on how the industry will deliver on its access-to-cash commitments through a range of solutions, including shared bank hubs and free ATMs, alongside cashback without purchase which was recently expanded to cover over 2,000 shops.”

The 17 constituencies Which? identified are Plymouth, Moor View; Forest of Dean; North East Derbyshire; Hazel Grove (Greater Manchester); Central Suffolk and North Ipswich; Wirral West; Harrow East (London); Penistone and Stocksbridge (Yorkshire); South Staffordshire; Mid Bedfordshire; Stone (Staffordshire); Buckingham; South Cambridgeshire; Sheffield Hallam; Clwyd South; Carmarthen East and Dinefwr; and Gower.

Additional reporting: Twm Owen