Financial Services and Markets Bill

Baroness Twycross Excerpts

2nd reading
Tuesday 10th January 2023 Lords Chamber

[Baroness Twycross (Lab)]

My Lords, I look forward to hearing the maiden speeches of the noble Lords, Lord Remnant and Lord Ashcombe, and the noble Baroness, Lady Lawlor. I join others in welcoming them to the House. I declare an interest as London’s Deputy Mayor for Fire and Resilience, as the points I shall raise relate to an issue identified as a risk to the resilience of individuals and vulnerable groups—a societal risk—in the London City Resilience Strategy in 2020. This strategy, published shortly before the first Covid lockdown, identified the trend in digital transactions and away from cash:

“A proliferation of digital payment technologies allow individuals to all but avoid the use of cash on a day to day basis. According to the AT Kearney Global Trends 2019-2024 Report ‘the growth of digital applications, e-commerce, and online payment technologies will keep growing over the next five years and beyond’ and we are ‘likely to see the emergence of the first truly cashless society in the next five years. A move away from cash may pose a risk to certain vulnerable groups, notably those facing barriers to digital transactions, or those more likely to be excluded from the mainstream banking system. This could affect the resilience of these groups, as well as … the personal resilience of isolated people, including older generations who are more likely to be reliant on cash.”


During the pandemic, there was a clear acceleration of cashless services, with the organisation LINK identifying that use of cash has reduced by 40% compared with pre-pandemic levels. More recently, however, there has been a subsequent increase in the use of cash by consumers during the cost of living crisis, with 10% of people saying they plan to use cash more than previously to help them budget. This alone demonstrates a clear continued need for cash by the public, despite what has been described as the turbocharging of a move away from cash since 2020. It is welcome, therefore, that the Bill includes a requirement on the Treasury to publish a cash access strategy and a requirement on the FCA to ensure reasonable provision of cash access services—and “reasonable” should, must, mean “adequate”.

The requirements must also ensure that older people, those with disabilities and those on a lower income who rely on cash are not adversely affected. We have a tradition in this country that the public are not charged for withdrawing their own money. This is a good tradition and should become an explicit right. This legislation should make it clear that there should be a default right to access cash free of charge and a right to use cash to buy basic goods and services for those for whom other forms of payment are not an option. This group, which is at risk of being marginalised, includes more than 5 million people who rely on using cash for their normal spending—a significant minority who should be protected.

Equally important is that there is no poverty premium on cash users and that the decline in free-to-use ATMs and the increase in pay-to-use ATMs—all too often found in some of our most deprived communities, as well as many rural communities—are halted. The closure of almost 6,000 bank and building society branches since the start of 2015, as has been noted, has left many consumers without easy access to a bank branch and is exacerbating the issue.

There have been some imaginative approaches to piloting ways to address these issues, but more needs to be done to assess the pilots to make sure they work and to roll out measures that can address this issue. The Bill provides the ideal opportunity to do this. I agree with the noble Lord, Lord Hunt, that it could go further in this regard. As the consumer organisation Which? has said, we need to avoid sleepwalking into

“a situation where cash users struggle to make purchases or are excluded from certain services.”

Without ambitious plans to ensure that all those who require cash can still use it and that they have easy and free access to it, there is a clear risk of further increasing the impact of financial exclusion, which is all too widespread in our society already.