Pauline Bryan: Government should compel banks to guarantee free ATM withdrawals
Cashpoint charges disproportionately impact older people and those on low incomes. As access to free cash machines continues to decline, the Government must act now to protect the vulnerable, writes Pauline Bryan
We must have at least four cash machines on Parliamentary estate and as far as I am aware none of them charge us for withdrawing cash.
It can come as an annoying surprise when you find yourself needing cash and the only ATM available has a charge which can be anything from 95p to £1.99 per transaction. Many of us probably say “no thanks” and drive on until we find another that doesn’t charge. Alternatively we may think, well if I take out £100 it is only a 2% charge.
But what if you are living on a small pension, or have a disability, and managing on a tight budget with only just enough left in the bank to see you through? Perhaps you just want £10 but that could involve a payment of almost 20% simply to access your own money. Just as the exploitation by pay day lenders was wrong so is this charge that disproportionately impacts on people with low incomes.
Research by ‘Which?’ has found that around 2.7m people in the UK rely wholly on cash for their daily lives. Lower-income families and older people are hit the hardest by closures of free-to-use cashpoints. Over three quarters, 78% of consumers in the two lowest household income groups rely on cash, using it two to three times a week, while 80% of people living on a pension use it frequently.
The problem of bank and post office closures, which has often meant the withdrawal of their cash machine, has been exacerbated by a decrease in the fee the banks pay the ATM machine providers. This has resulted in a big increase in ATM operators converting from free to use to pay to use.
According to a study by ATM Industry Association, London and Scotland are most at risk of losing free access. A report from the body last month warned that one in five ATMs could charge for withdrawals in Scotland within a year. The number of cash machines in Scotland has decreased at a rate of 32 a month in the 11 months to April 2019. Both inner cities and rural areas are affected and a survey of Scottish consumers by ‘Which?’ revealed that 19% of people in rural Scottish communities say their nearest free-to-use cash machine was already too far away to walk to.
Gareth Shaw, Head of ‘Money Which?’ stated that “Communities are being stripped of free access to cash at an alarming rate that could hit the most vulnerable in our society the hardest, while denying millions of people free withdrawals. A regulator is desperately needed to get a grip of these rapid changes across the cash landscape and ensure all those still reliant on this important payment method aren’t suddenly shut out from accessing the cash they need in their daily lives.”
Last year Ged Killen introduced a private members bill to prevent charging for accessing cash and the Labour Party has pledged to legislate to give power to and place a duty on the Payment Systems Regulator to disallow charges to consumers when withdrawing cash, ensuring all cash machines are free at the point of use. Killen has said that he will lodge amendments to the Finance Bill 2019 to outlaw the charging of fees at ATMs.
I will be asking the minister what measures the Government will take to ensure that banks provide free withdrawals from current accounts at ATM machines. In May 2019 Philip Hammond announced plans to establish a new group chaired by the Treasury to investigate how to deal with the problem. The issue of access to cash is not new, but it is getting worse and many people can’t wait for yet another review. We need action now to protect those with least having to pay most just to access their own money.
Baroness Bryan of Partick is a Labour peer