Bank of England Outlines New UK Access to Cash Regime

The Bank of England has outlined plans to ensure cash remains available in the U.K.

In anticipation of its expanded remit to protect access to cash granted by the forthcoming Financial Services and Markets Bill (FSMA), on Wednesday (Dec. 14), the BoE put out a consultation on how it intends to implement its new powers.

As the consultation paper explains, the existing wholesale cash distribution system “was designed for a world with higher cash usage.”

Pointing out that cash usage has declined by 50% since 2016, the BoE said that “should this trend continue there is a risk that the current cash infrastructure could increase the costs of cash management, creating risks of disruption to consumers and businesses who need access to cash.”

Central to the Bank of England’s new remit is a provision within the FSMA to grant it the power to impose financial penalties. The FSMA requires the BoE to produce a statement on its approach to issuing such fines, which the bank on Wednesday said it would consult on and publish in 2023.

In the consultation paper, the BoE said its approach will be to impose fines based on “the impact or potential impact on the wholesale cash infrastructure, of the breach, the previous disciplinary and/or supervisory record of the recognized firm, as well as their conduct and co-operation with the Bank after the breach was identified.”

Other enforcement actions the BoE has proposed include publishing details about compliance failures and the power to prohibit people from sitting in management positions at firms that play a role in the U.K.’s cash supply.

The FSMB also gives the bank the general power to give directions to such recognized firms.

In the consultation paper, the BoE said this power is intended “to put safeguards around material changes to recognized firms’ business models,” for example, cash center closures or market exits,

Which companies exactly will count as “recognized firms” under the new regime is yet to be revealed. However, under the current Note Circulation Scheme, only G4S, Post Office, National Westminster Banks and Vaultex UK are permitted to distribute cash from the central bank.

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