Free-to-use cash machines and bank branches must be maintained to ensure that vulnerable Brits do not fall behind, warns a new financial inclusion report.
The Treasury Select Committee insists that preserving a branch network is a “key step” to maintaining inclusion with both the elderly and those on low incomes still reliant on them due to a lack of digital access.
They have been the hardest hit by the 13,000 branches shuttered since 1988 while IT system failures also show the need for a high-street presence, according to the report.
MPs warned that banks have been ushering customers towards the Post Office for basic banking services with the taxpayer picking up the tab for the loss-making service. The Committee stressed that Post Offices “should not be seen as a replacement for branches” but recommended that banks should be required to set up and fund ‘banking hubs’ in the local Post Office when all branches have been closed in the area.
Shame to be stood down from @bbc5live interview on this report on financial inclusion because the ‘editor thinks it will look odd to have an MP on who isn’t talking about Brexit or leadership’ – seriously? We can talk about other things! https://t.co/xViIo3WxJ7
— Nicky Morgan MP (@NickyMorgan01) May 13, 2019
Similarly, free-to-use ATMs are also disappearing at a fast rate – 300 being lost every month according to Which? – and the report warns that “failure from the Government to intervene risks the UK inadvertently becoming a cashless society”. The solution from the Committee is for the government to act on the Access to Cash Review’s recommendations urgently.
Monzo’s gambling transaction block – allowing customers with an addiction to prevent transactions to gambling companies – was also praised, with the Committee urging mainstream banks to follow suit and, so far, Barclays have done so.
But the report warns that a lack of data is hampering attempts to widen out the block to protect from other vices, for example, supermarkets do not distinguish between alcohol purchases and other products.
Vendors buy magazines for £1.25 and sell them for £2.50. They are working and need your custom.
There were further recommendations for a legal duty of care to ensure that retail financial service providers act in customers’ best interests and calls for transparency with the loyalty penalty – where customers lose out for not switching providers.
Committee chair Nicky Morgan MP said: “The importance of financial inclusion cannot be understated. As the World Bank said recently, there can be no end to poverty without financial inclusion.
“The financial inclusion of vulnerable consumers – and we can all be vulnerable at some point in our lives – should be of the utmost priority for financial services providers, the government, and financial regulators.
“It can no longer be an option for banks to ignore financial inclusion.”
The Committee’s findings have been praised by debt charity StepChange as well as Money and Mental Health Policy Institute (MMPI) with both supporting recommendations on debt collection.
The report suggests amendments to legislation ensure that customers with low literacy are protected from debt collection letters as well as encouraging local authorities to sign up to Citizens Advice and the Local Government Association’s Council Tax Protocol.
StepChange’s director of external affairs Richard Lane said: “People experiencing problem debt really do need help, and the scrutiny now being given by MPs to the flaws in the system can only lead to improvements.”
Today's @CommonsTreasury report calls for wide-ranging changes to financial services to make them more inclusive for people with #mentalhealth problems. We were delighted to see so many of our own recommendations featured in the final report – here are a few highlights: 1/5 pic.twitter.com/VYXoZCwt6v
— Money and Mental Health (@mmhpi) May 13, 2019
MMPI’s chief executive Helen Undy added: “Many people with mental health problems rely on cash for budgeting and managing their money. It’s really encouraging that the Committee has called for the government and firms to protect access to cash, particularly for vulnerable people.”
The Big issue is well aware of how financial exclusion impacts on our vendors.
We know that the demand for cashless options is ever-increasing and that is why we are working with iZettle to trial contactless payments for vendors across the UK.
The Pay It Forward scheme is also helping vendors to earn cashlessly by offering readers a chance to resell the magazine to a friend just by scanning a QR code.