New rules to protect cash access and scam victims become law

The Financial Services and Markets Act has received Royal Assent
Grace WitherdenSenior writer

New rules which will ensure a minimum level of free access to cash and give better protection to victims of bank transfer scams have become law today. 

The measures form part of the Financial Services and Markets Act and received Royal Assent today (29 June), following two longstanding campaigns by Which?. 

Here, we explain what the legislation means for cash users and the measures which will make sure scam victims are reimbursed if they are tricked into transferring money to a fraudster.

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What is the Financial Services and Markets legislation?

The legislation was first committed to in the Queen’s Speech in 2022, and aims to 'strengthen the United Kingdom's financial services industry, ensuring that it continues to act in the interest of all people and communities'. 

Which? has tirelessly been working on the bill as it made its way through parliament to ensure it remained as strong as possible and successfully campaigned for the government to introduce an amendment on free access to cash. 

How will the new law protect scam victims?

The law also includes measures to better protect scam victims, by making sure they are reimbursed if they are tricked into transferring money to a fraudster. 

Industry figures show that in 2022, victims lost £485.2m to authorised push payment (APP) fraud – where individuals or businesses are tricked into sending money to an account controlled by a fraudster.

In 2016, Which? issued a super-complaint highlighting the glaring gap in fraud protection and redress for APP fraud. 

The voluntary CRM Code followed in May 2019, intended to give APP fraud victims fairer and more consistent redress. However, Which? successfully campaigned for mandatory reimbursement after raising concerns that victims still face a reimbursement lottery. 

The Payment Systems Regulator (PSR) has set out its plans for introducing mandatory reimbursement, but will be consulting over the summer on the finer details of what this system will look like for consumers - including what level the excess on claims should be set at, and an appropriate maximum value on claims. 

The new reimbursement requirement will come into force in 2024.

How will the new law protect cash?

The new law will ensure people can continue to conveniently withdraw and deposit cash, following the rapid rate of bank branch and ATM closures.

His Majesty’s Treasury will set minimum distances for cash withdrawals and deposits and these may differ between urban and rural locations, and also for personal and business accounts. 

The government has said it expects these details to be confirmed in a policy statement to be published 'no later than the end of September'.

These will be monitored and enforced by the Financial Conduct Authority (FCA). 

With its new powers, the FCA could stop banks and building societies from closing cash access services if there is no suitable alternative within a reasonable distance.

Previously the Bill did not specify whether withdrawal and deposit facilities should be free, or whether consumers might have to pay a charge. 

But through a late amendment to the Bill, called for by Which?, it will now ensure that people across the country can withdraw and deposit cash for free.

This means the FCA will have greater power over major banks and building societies to ensure reasonable free access to cash is preserved for those who need it.

Why is it needed?

Link, the UK’s largest cash machine network, estimates 5.4 million adults rely on cash in their day-to-day lives. 

Yet 13,900 free-to-use ATMS in the UK have been lost since 2018, leaving many areas across the UK with particularly poor access to cash.

On top of this, Which? analysis has found almost half of the UK’s bank branch network has closed since 2015.

Banks and building societies have closed (or scheduled the closure of) 5,699 branches since January 2015, at a rate of around 54 each month.

Which? campaigns lead the way

Rocio Concha, Which? director of Policy and Advocacy, said: ‘Which? has led the way in campaigning for new laws to protect consumers' ability to access cash and greater protection against suffering losses should they fall victim to a bank transfer scam. 

‘Cash still remains vital to millions of people's lives and the government has backed Which?'s calls to guarantee minimum levels of free access to cash and ensure consumers won't be left high and dry should a bank branch close in their community. 

‘With the UK still in the grip of a fraud epidemic, new rules for victims getting their money back should end the current reimbursement lottery and lead to fairer and more consistent outcomes.’

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