Response to the Financial Conduct Authority's Consultation on Access to Cash (HTML)

Consumer Scotland is the statutory body for consumers in Scotland. Established by the Consumer Scotland Act 2020,i we are accountable to the Scottish Parliament.

The Act provides a definition of consumers which includes individual consumers and small businesses that purchase, use or receive products or services.

Our purpose is to improve outcomes for current and future consumers and our strategic objectives are:

• to enhance understanding and awareness of consumer issues by strengthening the evidence base
• to serve the needs and aspirations of current and future consumers by inspiring and influencing the public, private and third sectors
• to enable the active participation of consumers in a fairer economy by improving access to information and support

Consumer Scotland uses data, research and analysis to inform our work on the key issues facing consumers in Scotland. In conjunction with that evidence base we seek a consumer perspective through the application of the consumer principles of access, choice, safety, information, fairness, representation, sustainability and redress.

We work across the private, public and third sectors and have a particular focus on three consumer challenges: affordability, climate change mitigation and adaptation, and consumers in vulnerable circumstances.

Consumer Scotland welcomes the opportunity to respond to this consultation on the Financial Conduct Authority (FCA) guidance on the Anti-Greenwashing rule.

Consumer Scotland welcomes the proposals to implement formal measures to maintain appropriate levels of cash access across the UK. It is clear that, as a long-term trend, demand for cash is falling and will continue to do so, with the number of cash payments forecast to fall by around a half by 2032.ii Despite this continued decline, cash remains in significant use in the UK, with just over 3 million people (roughly 6% of the population) using cash to pay for most or all things in 2022. In this context, the FCA’s approach to managing access to cash strikes an appropriate balance between maintaining necessary cash access levels for those who require it, including the most vulnerable in society, and not prescribing provision of cash beyond levels of demand.

We broadly support the measures suggested by the FCA, although there are some aspects of the proposals which may benefit from greater clarity around definitions and greater specification of requirements. The FCA should encourage designated firms to publicise key information about all phases of the cash access request scheme throughout their local community, in more active and varied ways, which go beyond publishing information on their websites and providing updates to elected officials. Without further awareness raising measures in place, there is a risk that consumers, including those in vulnerable circumstances, will not be sufficiently aware of scheme and how to engage with it. Using a mixture of physical, digital, and stakeholder-based promotion, such as engaging with community groups and venues will increase awareness of the scheme within communities, including helping to get information to those that are more digitally excluded. It will also increase access to local support mechanisms to help consumers engage with the process.

There are some areas of the FCA’s proposals where a lack of detail may lead to different designated firms undertaking and discharging their duties in inconsistent ways. While we understand that the FCA does not wish to prescribe strict rules for how designated firms should undertake cash access requests, more detailed guidance on considerations such as how to define a local area or a significant cash deficiency would allow for a better-defined range of responses. This could make the experience of using cash access requests clearer and more consistent for consumers, no matter which firms or coordination bodies they engage with or where they live.

We also highlight some of the unique characteristics and challenges relevant to consumers in Scotland. In particular, we draw attention to the different approach to defining rural and urban areas in Scotland, the unique circumstances of Scotland’s many island communities in relation to cash access assessments, and the specific difficulties that extreme weather events may cause for accessing cash via isolated transport routes. While we understand that, broadly, the FCA will want to take a UK-wide approach to this proposal, we ask the FCA to consider the differing needs of consumers across the UK, especially in remote and island communities, when developing guidance for designated firms. In addition, we urge the FCA to consider the overall resilience and models of provision for Post Office services in those areas when considering what appropriate access to cash looks like in Scotland.

The FCA proposes that designated firms should carry out assessments to determine whether additional cash access services are required following various ‘trigger events’. These assessments would address potential local deficiencies of access to cash where there is a closure of a cash access facility or a material reduction or change in the services it provides. Communities will also be able to trigger a cash access assessment by submitting a cash access request.

Consumer Scotland agrees with the proposed ‘trigger events’ for cash access requests. We welcome the increased formalisation of this process and believe the proposals are appropriate and cover a wide range of circumstances.

We welcome the ability for communities to be able to trigger cash access assessments by submitting cash access requests. The ability for communities to do so will add further robustness to the process and should improve consumer empowerment and confidence. These processes could be especially useful where local areas face material changes that are outside of operational considerations for the designated entities. For example, in cases where new major housing developments are completed in the area, or where significant reductions to transport links occur, demands for, and access to, cash could be significantly affected. Giving communities the ability to request cash access assessments should allow external considerations such as these to be taken into account, as set out in paragraph 4.27 of the FCA proposal. This is an important mechanism in maintaining appropriate access to cash based on the lived experience of people in various and diverse communities across the country.

Consumer Scotland agrees that, in theory, the FCA’s proposals will enhance the ability of communities to proactively address cash access concerns. Ensuring that cash access assessments are carried out in response to both trigger events and in response to cash access requests from communities provides a strong and comprehensive basis for ensuring that the needs of communities are considered. The ability for community members to actively submit their own cash access requests means that they do not have to rely on trigger events taking place to raise their own concerns about access. We agree that designated entities should not have to act on duplicate cash access requests within a 12-month timeframe. It is our understanding of the proposal that if a new trigger event relating to a material change in provision occurs within this 12-month period, that this would trigger a new assessment process, and we feel this is appropriate. With this caveat established, the proposed 12-month timeframe is a reasonable provision that does not necessarily restrict appropriate future cash access requests from a community.

While these provisions should empower local communities to raise cash access requests, in practice local residents will need to be aware of this process and have some expertise to engage with it. In line with the consumer principles of information and accessibility, we would welcome the FCA considering what further action and information may be needed alongside these formal proposals to ensure that communities can take advantage of their entitlement to act.

Although the FCA proposal makes some suggestions for publicising cash access requests it is only explicitly stated that information should be shared on the websites of designated entities and with local political representatives. The FCA should consider how local communities could be further informed, supported and resourced to engage confidently in a cash access request process. This could take the form of a wider process of community engagement between the designated firms and key local stakeholders, including, for example, local politicians, local development trusts, community councils, libraries, community centres etc. Such an approach could provide a wider base of support for community members who wish to submit a cash access request. The FCA should also consider whether such support would require additional resource.

Consumer Scotland agrees with the circumstances listed in the proposal where cash access assessments need not be undertaken. These circumstances include where the requester does not have sufficient interest in the local area, if a requester withdraws a request, or where a proposed closure is no longer happening. However, we do not propose any further circumstances under which a cash access assessment should not progress. Given the recognition by banks, advocates for older people, domestic violence survivors, rural consumers, and the FCA themselves that a lack of access to cash can be problematic or exclusionary for people in vulnerable circumstances, we consider that maintaining an otherwise broad access to the right to submit a cash access request is appropriate.

We note that the Treasury has set out the distances (as the crow flies) within which it understands at least 95% of people have access to cash deposit and withdrawal services. The Government’s policy is for this coverage to be maintained. Different distances have been set out for rural and urban areas; for urban areas the relevant distance is within 1 mile of where at least 95% people in the local area live while for rural areas the relevant distance is 3 miles. The Treasury also recognises that cash access needs differ by location and that there is a need to have particular regard to local deficiencies that have significant impacts. As such, the FCA has proposed that designated entities be afforded the flexibility to develop their own methodology to define a local area, based on their assessment of where people and businesses who may be affected are based, and including whether the given area is urban or rural.

Consumer Scotland broadly agrees with the proposed approach of establishing a local area by reference to the addresses of those who could be affected by a deficiency in cash access.

However, while we agree that there may be a need for an element of flexibility in determining local areas, the lack of detailed guidance risks creating a lack of clarity both in relation to how these addresses will be identified, and more broadly, how the size and scope of ‘local areas’ to be assessed will be determined by designated firms upon receipt of a cash access request. If different designated entities utilise different methodologies to determine local areas for assessment, there is potential for communities served by different entities to have inconsistent experiences with cash access assessments.

We also note the binary nature of the rural or urban split. We recognise that this is based on an ONS specification and note that this specification is broken down into further sub-categories. The FCA should consider whether a more granular approach to categorisation might allow for more representative consideration of local characteristics.

The geography of Scotland is significantly different to other areas of the UK in terms of the rural, remote and island landscape. Consequently, the Scottish Government has its own methodology for urban and rural definitions. This, too, is broken down beyond an urban/rural binary into more specific categories based on population size and accessibility.

We recommend that the FCA should specifically consider the experience of island communities in Scotland. It was acknowledged in a recent Scottish Affairs Committee report that the impact of branch closures on island communities can be disproportionately higher, with alternative cash access options for an area requiring ferry transfer and larger distances and travel time to reach. Especially in remote areas, consumers in Scotland can face particular challenges with extreme weather events having potential to affect the more limited transport infrastructure in those areas. There is clear potential for remote communities to be cut off from cash access facilities during future extreme weather events, and we would suggest this may require the FCA to provide a greater degree of resilience for the cash access network in rural areas to prevent a lack of access due to, for example, road closures or adverse weather events.

The FCA should consider developing guidance which includes specific principles related to more remote areas or areas with one or more island communities in order to effectively reflect the extra travel and logistical challenges such communities may face. Providing the ability for firms to consider issues such as remoteness, sparsity of road infrastructure or poor public transport links may help encourage a greater consistency of experience and improve outcomes for consumers and stakeholders.

The FCA proposes that where only one bank or building society branch is or will remain within the defined local area where a branch closure is proposed, a fuller assessment would be required. Consumer Scotland does consider that the ‘last branch in town’ proposal is an appropriate principle to utilise as part of cash access assessments. This will help to protect consumers in vulnerable circumstances who are reliant on branch services for their access to cash.

While we support the ‘last branch in town’ proposal, we would like the FCA to consider if it is powerful enough to protect the consumer principle of choice.

While the ’last branch in town’ may be sufficient to suitably serve consumers in some circumstances, there may be other communities with higher populations or population density, which have a broader set of consumer requirements in terms of access to services. We would therefore ask the FCA to consider whether there may be some ‘local areas’ which could require greater levels of provision, beyond maintaining a single branch, This may be, for example, to minimise the need for consumers in vulnerable circumstances to switch their accounts in great numbers in order to access local services, and/or to maintain the principle of choice for consumers. This is especially important for those who may have specific access needs, who require assisted cash services, or who are digitally excluded.

We broadly agree with the FCA’s proposals for Step 2 of the cash access assessment process. We support the requirement to assess the proportion of consumers and SMEs in the area displaying characteristics which may make them more likely to rely on cash. We also agree that assessing whether a cash access deficiency has a significant impact on a local area is preferable to putting in place a simple numeric or statistical threshold. We do, however, suggest that more clarity of definition may be needed for the determination of “significant” deficiencies in cash access. Although a number of considerations have been suggested within the FCA proposals for what should be considered when making these determinations, there is no guidance on how these considerations may be considered or weighted. While some flexibility in approach may be required between designated entities, there may also be a need to encourage more consistency between different firms’ approaches to measuring the significance of access deficiencies. We recommend that the FCA consider developing more detailed guidance to underpin these provisions.

The FCA should consider the availability of sufficient telecoms connectivity and services and digital literacy as an additional factor for designated firms to consider.

There are several reasons why this might be considered:

• Some physical businesses within an area may not be able to switch to chip and pin services where access to a reliable internet connection is too poor, meaning they will continue to rely on cash to trade and consumers will rely on cash to access these services.
• Consumers and businesses in an area of less reliable connectivity may be less likely to use mobile banking, further encouraging them to continue to rely on cash services.
• There remain groups of consumers in vulnerable circumstances, including a disproportionate number of those who are older and/or on lower income, who do not have access to mobile devices or who do not have skills, confidence or support to use online services. These consumers will likely not be able to switch to online services as a reasonable substitution for their personal banking, potentially leading to significant harm for those consumers should population demographics and digital literacy also not be considered within this process.
• There may be safety implications for those who are digitally excluded and who may only be able to access bank services via online or mobile app banking if trusted places which provide human support with transactions are closed without due consideration. Such situations may lead to consumers in vulnerable circumstances being reliant on other people to conduct their banking, which could reduce their financial independence and potentially leave them open to fraud or theft

We would welcome the FCA setting out further guidance for designated entities about how these complex issues can considered. We would welcome joint regulatory work between the FCA and Ofcom on how access to adequate telecoms impacts banking services for consumers, particularly those in rural and remote areas.

Consumer Scotland would also emphasise the importance of considering the capacity of Post Office services across the country. While the availability of Post Office services is already a relevant factor, it’s importance may need to be highlighted, given that Post Office branches make up more than 65% of all branch-based cash access points in the UK.

We would urge the FCA to not take Post Office capacity for granted. We note that stakeholders at the Scottish Affairs Committee recommend that caution should be exercised when judging Post Office capacities and that they should not necessarily be seen as simple alternatives to branch or ATM services.

Consideration should also be given to how the Post Office currently delivers its services to rural and remote consumers. A significant proportion of Post Office branches operate as part-time outreach branches (for example, a Post Office van travelling to a village for a few hours per week). These models have grown by 87% since 2012, and will likely continue to grow as more Sub Postmasters struggle to maintain a financially viable business in a rural or remote location. Access to cash in rural or remote communities especially could be severely limited if it is solely delivered by a Post Office branch which subsequently closes or changes to an outreach model. Previous research by Citizens Advice has shown that these challenges can be significant and potentially lead to harm for consumers. For example, fragmented Post Office services will only suit some consumers, such as those able to attend an outreach branch during working hours. The FCA should continue to take account of these challenges when considering in what circumstances a deficiency exists in local provision.

Meaningful communication with communities and taking local circumstances into consideration will be crucial to accurate assessments being completed. There is, however, no specific requirement that the designated firms work with local stakeholders or interest groups such as community councils, charities or community organisations. We would welcome the FCA setting out in more detail what they expect firms to do when engaging with local community groups and how they can demonstrate that such engagement has been conducted meaningfully.

Consumer Scotland supports requiring designated firms to publish and periodically review their policies and procedures around cash access assessments. This should increase scrutiny and improve the robustness of their processes. We welcome the FCA’s intention that the views of stakeholders, including consumers and SMEs, are considered as part of the design and ongoing monitoring of processes and can feed into improvement of the assessment process.

We do, however, retain some questions about the level and nature of oversight in place by the FCA when such processes and reviews are deemed unsatisfactory. We would welcome, for example, further clarity on what information designated entities would be required to disclose in their reporting, and what actions the FCA will take if the designated entity either does not sufficiently provide the required information, or if their policies and procedures are deemed to fall below a required standard.

Consumer Scotland is broadly content with this proposal but would query whether 21 days is sufficient time to allow a review to be requested. This timeframe relies upon information being supplied to communities promptly and in a sufficiently visible manner. Where communities need to consult or work with other bodies to access supporting information, a longer time may be helpful.

We would therefore be supportive of a longer timeframe being implemented to allow those with sufficient interest to lodge a review. One model the FCA may consider replicating is that of Post Office Ltd, which commits to a 6-week local consultation where branches are either closed or relocated. Given the interconnection between Post Offices and access to cash, there could be merit in bringing these timeframe into line with each other.

The FCA proposes that where a cash access assessment identifies an additional cash service is needed in a local area, each designated firm involved in that assessment will be responsible for ensuring the new service is put in place for the benefit of their own customers. They may do so acting either collectively with other providers or independently. Consumer Scotland agrees with this approach and with the FCA’s assessment of alternative options, as set out in the paper.

We agree with the FCAs proposal to hold designated firms responsible for delivering services across their entire area of designation, regardless of their operational footprint. We agree that while the scale of a given designated firm’s direct provision in a local area may sometimes be minimal, they will also be likely providing cash services more broadly in any given area via Post Office banking and the ATM network. We also agree that this consistent approach should dissuade firms from exiting areas to avoid service obligations in a way that could adversely affect consumers access to cash. This could especially be a risk in more rural or less profitable areas.

Consistent policy in this area will lead to stronger accountability and consumer understanding. Putting in place looser requirements according to the footprint of a business would ultimately detract from that.

With regards to cashback, Consumer Scotland agrees that only cashback available without a purchase, consistently provided, should be considered when assessing the availability of cash access services in a given area. The alternative of also considering cashback with a purchase would mean that consumers may need to spend more money on qualifying purchases in order to regularly access cash, which would have adverse effects for those on low incomes.

The FCA should also consider whether cashback without a purchase, even when the service is shown to be offered consistently, can be relied upon to access cash in designated local areas where provision is otherwise minimal. Regardless of the consistency of service, access to this cash does not match the access afforded by bank branches or free to use ATMs.

Overall, Consumer Scotland welcomes the proposals, which are wide-ranging, comprehensive, and appropriate. There are some areas where more detail may be required, although we recognise that in some cases this will be provided at a later point. It may be useful to provide more clarity on the definition of certain key concepts within the framework. Having a clearer approach to defining certain concepts in the guidance, even allowing for reasonable flexibility, will help deliver a consistent consumer experience. For example, more detail on the following:

• how designated entities can define local areas with a margin of consistency • what could constitute a significant deficiency as part of an assessment • establishing some general principles for how designated firms should engage with local stakeholders and communities, keeping them informed and making them aware of the measures in place, how they can engage with the process, what the outcomes are, and how to request reviews or pursue complaints. • how the FCA will monitor firms’ compliance with the proposals and the overall effectiveness of the policy

Establishing more detailed guidance in these areas could create greater consistency in approach from designated firms and improve consumer outcomes. We understand that implementation of these guidelines may be something of an iterative process between designated entities and the FCA, and as implementation progresses, examples of best practice may emerge that can usefully by highlighted or shared.

We suggest that, at least in the early stages of implementation, the cash access assessment process may require closer oversight and review by the FCA into the implementation of the new measures both for designated firms and for consumers.

With extra oversight from the FCA over the first year, for example, of implementation, it is more likely that any issues that arise can be addressed and improved upon. At a later stage, it will likely be reasonable for the FCA to maintain more distant oversight if the processes appear to be working well.

Consumer Scotland supports the FCA’s proposals on how designated firms can inform local consumers about any closure or material change in cash access services.

We also suggest some ways to increase awareness of this information in the local community.

Physical notices at a specific site may be one effective measure, but this could be enhanced by requiring notices at all cash access facilities in the designated area, along with other community venues where vulnerable consumers may also attend, e.g. care homes, sheltered accommodation, community centres, GP surgeries, libraries. Other means of sharing this information, such as local newspapers, community websites and social media channels may also be effective. Finally, we would recommend that information about the change be published on the designated firms’ websites or local online platforms. This extra dissemination of information would significantly increase the likelihood that local consumers would be aware of the planned change.

We also support the proposal that designated firms should provide and maintain a ‘cash locator tool’. This would be a valuable tool for consumers able to access it. Such tools should not be restricted to the footprint of the designated firm only. We would suggest consideration be given to whether a designated coordination body should routinely provide the tool for all designated firms in the area collectively.

Having a single tool which includes information about the services offered by all banks in the designated area will help maintain consistent levels of information for consumers.

We have answered the four questions above (23, 24, 25, 26) collectively as our responses to these questions take similar form.

Q23: Do you agree with our approach to designated entities raising awareness of the cash access request scheme?

Q24: Do you agree with our proposals for publishing information about the outcomes of cash access assessments? If you believe there is further information that designated entities should provide, please give details.

Q25: Do you agree with our proposals for publishing information about additional cash access facilities? If you believe there is further information that designated entities should provide, please give details.

Q26: Do you agree with our proposals for sharing information on the closure of a facility? If you believe there are other stakeholders that designated entities should engage with, please give details.

Consumer Scotland generally agrees with the FCA’s approach to how designated entities should raise awareness of the cash access request scheme, publish information about the outcomes of cash access assessments, publish information about additional cash access facilities, and share information on the closure of a facility, subject to the points below.

The proposals to require designated firms to publish information about the cash access request scheme generally, and about additional cash access facilities to be introduced clearly on their websites, is a good starting point. We note, however, that some consumers in vulnerable circumstances, who the scheme may be most relevant to, are more likely to face digital exclusion and be unable to access information published online. Posting physical notices in strategic places where consumers may be more likely to see them, or working with trusted local partners, such as community centres, GP surgeries, libraries, and job centres, and sheltered accommodations, would be a useful measure to help raise awareness of the cash access request scheme.

We also recognise the benefit of sharing information about the cash access request scheme with local elected officials, but working with a wider range of local partners, such as those listed above, may be necessary to help raise awareness of the scheme, and to create extra support capacity in the local area for those who may need help to engage with the process.

Consumer Scotland further agrees that designated firms should be required to publish information about the outcomes of cash access assessments and closures of facilities. The information the FCA would require to be included is appropriate, and such information will be crucial for consumers, and particularly consumers in vulnerable circumstances, who could be especially impacted by changes to where they can access cash. We suggest that consideration could be given to displaying physical notices about the outcome of assessments at cash access locations. While posting full reports in such places would be impractical, the provision of a summary or signposting to sources of information would be feasible. We also suggest that the FCA consider requiring a simple boundary map for the local area that was assessed to be displayed alongside such a notice. This would help local consumers and businesses to understand the implications of the decision and determine whether it directly affects them.

Finally, Consumer Scotland is in broad agreement with the FCA’s proposals for sharing information on the closure of a facility and agree with the required information that should be shared as part of it. We especially welcome the proposal to require physical notices to be placed at facilities due to be closed as well as on the websites of the designated firms. We would suggest that similar notices should also be placed at other existing cash access facilities operated by the designated firm, given that the one being closed may not be the only one local consumers use.

The complaints process proposed in the consultation is broadly sufficient.

Our main reflection on the complaints process links to the role of the financial ombudsman service in relation to the cash access request process. It would be helpful to clarify the meaning of the term ‘potential customer’ to ensure clarity on whether they would be included in the definition of those with ‘sufficient interest’ in provision of services in the area. This would assist understanding around who can escalate relevant complaints to the financial ombudsman service.

In relation to potential complaints regarding cash access assessments, while consumers can complain to the firm or coordination body who first undertook the assessment, it is unclear what – if any – recourse they would have if they find the response to their complaint to be unsatisfactory. As set out in paragraph 9.38 of the consultation document, complaints relating to access to cash (including closures), and complaints about the delivery of additional cash access services may be able to go to the ombudsman if the complainant is not satisfied after first raising a complaint with the designated entity. This is not the case, however, for complaints relating to cash access assessments, and we would welcome further consideration about whether the complaints process regarding assessments can be brought in line with the complaints processes outlined above, in order to provide a more consistent approach for consumers.

The consultation document sets out that “complaints about cash access assessments may also not come under the Ombudsman Service’s jurisdiction.” However, based on the parameters set out in the FCA’s ‘DISP’ as well as the financial ombudsman’s ‘complaint checker, we consider that complaints of this nature could potentially fall into the jurisdiction of the financial ombudsman.