Banks all over the world have slowly begun closing branches and removing ATMs. All of this is done in an effort to cut down on overhead costs. In the Untied Kingdom taking such action will now require explicit approval from City council officials.
FCA Brings Down the Hammer
The decision made by the FCA is a rather surprising one. Ensuring banks cannot close branches or remove ATMs without clearance is an unexpected turn of events. Financial institutions are now prohibited from taking this action unless clients are treated fairly. Failing to comply with these new rules can result in significant fines.
Any bank considering the closure of branches or removal of ATMs will need to inform City regulators before undertaking any action. The regulator is then tasked with making the financial decision. Ensuring clients are treated fairly is a major step in the right direction. A lot of people can lose access to basic services if their branch or ATM is suddenly gone. Banking should be accessible at all times, but the opposite has come true in recent years.
According tot he FCA, there needs to be more transparent communication between banks and their clients. Currently, it is not uncommon to see an announcement made days before the actual change occurs. This is unacceptable, as it gives clients no time to prepare for alternative options. Banks will need to provide an analysis of customer’s needs when using the facilities, the impact of removing these options, and which alternatives are available to clients.
Finding a Workaround
It would not be entirely surprising to see banks try to work around these new requirements. Driving more clients to online banking has become a rather common approach. While online banking is an alternative solution, it is not the outcome the FCA wants to see.
The new FCA guidelines will go into effect come September 21. Providing alternative solutions may include sharing services with other providers, providing free-to-use ATMs, or focusing more on digital channels. Exploring the suitability of any alternatives needs to become the top priority, especially where “vulnerable” customers are concerned.
According to a recent survey, 10% of UK adults cannot cope with a cashless society. While the COVID-19 pandemic has eroded cash usage even further, many hope to see things return to normal soon. As banks shut down branches and remove ATMs, access to cash will be limited even further.