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From 21 September 2020, financial institutions will be expected to provide the FCA with an impact analysis of any branch or ATM closures and pay-to-use conversions. The policy is a huge step towards protecting cash for the vulnerable and is a direct response to the 2019 Access to Cash Report, which found that 17% of the UK population would struggle to cope in a cashless society.
The analysis will be expected to assess the needs, impact and alternatives available to both commercial and account-holding customers. Not only are cash withdrawal and deposit analyses required, but the FCA will also ask for summaries of key economic indicators to identify the risks posed to vulnerable customers:
“The firm should assess the suitability of the alternative(s), including for vulnerable customers. This should include consideration of the relevant characteristics of customers and of the area, such as the quality of internet or mobile signal. Where proposed alternatives are not already available, the firm should provide an estimate of when they will be available. It should also consider any likely additional risks or costs to consumers of these alternatives”
Despite financial institutions having the final decision on site closures and conversions, each event must satisfy the FCA’s Principles for Business – notably, treating customers fairly. If the analysis fails to provide evidence that customers are being treated fairly and have immediate alternatives to the services offered at the site in question, the FCA has stated that ‘action will be taken’.
The policy is a big win for protecting access to cash in the UK and will only be complemented further by any future government action outlined in the November 2020 budget. Financial institutions, however, now have an additional weight to add to their rationalisation programs, where the pandemic has already impacted cash requirements, operations and the pace of transformation.
Without well designed frameworks and standardised analysis, financial institutions that are scaling back their network will be faced with delays to their program, especially if the FCA choose to review and contest the outcome of the analysis.
As industry-leading cash experts, CMS Analytics works with financial institutions to provide economic analysis on their ATM and branch networks. This analysis is tailored to each transformation program, providing quantitative research into customer impact of network rationalisation, cost benefit analysis, market research and equipment optimisation - ensuring the FCA’s new requirements are met.
To learn more about how CMS Analytics can help streamline quantitative analysis for your network, while mitigating customer impact, please contact Lee Williamson, Managing Director:
E: lwilliamson@cmsanalytics.com
T: 07889 535 544
Read the FCA's Finalised Guidance on FG 20/3: Branch and ATM closures or conversions here.
