I thank Dean Lockhart for today’s debate. It is a very important subject, as we have heard from all today’s speakers. I appreciate that Mr Lockhart and many members have genuine concerns about Link’s proposed changes to interchange rates, the implications for the ATM network and the impact of those changes on consumers and businesses across Scotland.
Members will know that the UK Government retains legislative and regulatory responsibility for banking and financial services. However, Mairi Gougeon has made the point that we hope that UK Government ministers can take action to intervene, and I call on them to do so. I put on record that the Scottish Government stands ready to work constructively with all concerned, including UK ministers, in the interests of consumers and businesses.
Link has proposed changes to the operation of the UK’s ATM network with the intention of shifting incentives for ATM installation and operation from well-served urban areas to rural and financially excluded communities. As Monica Lennon and Jamie Halcro Johnston said, those machines are vital in allowing financially excluded communities and families to budget—they withdraw the money that they know they can spend without risk to their bottom line. That important function has not received the attention that it deserves. I take on board Mark McDonald’s point that, although the implications for rural communities are serious, there are issues for urban communities as well.
Link is introducing the measures because it believes that current incentives cause ATM providers to focus on profitable city centre areas where 80 per cent of free-to-use ATMs are within 300m of another free-to-use machine. It has proposed changes to the interchange rate to take effect from 1 July this year and is adopting a phased approach to the reform; we understand that each further reduction will be subject to further review by Link before implementation to assess the impact on consumers.
Link has said that there will be no change in the interchange rate for free-to-use ATMs that are 1km or more from the next nearest free-to-use ATM and, as Dean Lockhart said, it has indicated that 221 Scottish ATMs will be protected in this way. We also understand that Link is tripling its financial inclusion subsidy from 10p to 30p for ATMs in areas with poor cash access. I do not yet know whether that will support the community of Mastrick, for example, given the point that has been made about urban communities. However, like Mairi Gougeon, I hope that Link will listen to the concerns that have been raised in the chamber today with regard to both the urban and rural contexts.
We understand that Link believes that the changes are required to strengthen and increase the geographical coverage of the ATM network in the UK. We have to take it at its word, but I echo the response of members throughout the chamber: we need Link to carefully review the impact of its proposed changes on communities across Scotland and in the UK more widely.
Although Link’s aim to support the ATM network in vulnerable communities is laudable, the practical implications of the changes for consumers, businesses and communities in Scotland are as yet unclear. I was interested to hear the points that were made about the 10 per cent increase in cash use, and Richard Lochhead’s point about rural shows and other businesses that require cash was well made. In addition, charities in both rural and urban areas often require cash for donations.
The industry body, the ATM Industry Association, has estimated that as many as 10,000 free-to-use ATMs could be at risk as a result of LINK’s planned changes. The uncertainty surrounding the potential implications of the changes, on top of the continued branch closure announcements including that by Santander in the past week—Joan McAlpine mentioned a potential closure in Lockerbie—is unacceptable. Our communities need to know that they will continue to have free, secure access to cash to allow them to go about their daily lives.
I am pleased to support the save our cashpoints campaign that has been launched by Which? and the Federation of Small Businesses, although I am saddened that such a campaign is necessary. I have written to both the Payment Systems Regulator and the Treasury in support of the campaign, and I am pleased that I have received constructive responses from the Economic Secretary to the Treasury, John Glen.
The joint campaign by Which?, representing consumers, and the FSB, representing our small businesses, highlights the important role that cash continues to play in sustaining functioning local economies. Cash use is declining, although I take on board Mairi Gougeon’s point that there is evidence of a 10 per cent increase in cash use in recent times. For many, however, cash remains the preferred and in some case the only form of payment, and it accounts for 40 per cent of transactions.
I also note Maurice Corry’s point that there is a potential increased risk of burglary if people stash cash on their premises because they cannot rely on being able to access ATMs or bank branches, particularly if those facilities are far away from them, or if they are elderly.
I have no doubt that society as a whole is moving towards a cashless future, and there are opportunities and benefits to be achieved in doing so. However, the important point is that we are not there yet, and I am sure that we will not be there for quite some time to come. There is therefore a continued need for cash to be readily available to all.
The Which? and FSB campaign calls for the Payment Systems Regulator to conduct a wider market review to ensure that consumers continue to have access to cash. The review would cover the provision of free-to-use cashpoints and the long and short-term implications of Link’s decision, the requirement for Link to ensure that its financial inclusion policy meets the needs of consumers, and the long-term alternatives that will be available to consumers if free cashpoints are removed. As I said, I have written to the Payment Systems Regulator indicating the Scottish Government’s support for such a review.
Given the continuing trend of bank branch closures, it seems likely that the communities that are most affected by such closures will also be those that are most threatened by changes to the ATM network and face added uncertainty about the future of ATM provision.
I welcome the Payment Systems Regulator’s commitment to actively monitor developments as Link’s proposals are implemented. Indeed, that is a point with reference to John Glen’s response. I understand that the PSR will require Link to report to it monthly on the impact of the decision and on action that Link has taken to address any unexpected negative impact on the free-to-use ATM network.
If any protected ATM is due to close, the PSR is keen to ensure that there is a quick transition to a new operator without any adverse effects on consumers, and we need to hold it to that. I hope that the PSR will go further, using its regulatory powers and committing resource to ensure that no ATM in a vulnerable community closes until a new operator is found, and that communities are not left without free access to cash as a result of Link’s changes.
As Gail Ross, Dean Lockhart, Joan McAlpine, Monica Lennon and many others highlighted, concerns have been raised about the impact of branch closures on our local communities. As Richard Lochhead and Mairi Gougeon highlighted, those are being exacerbated by reductions in the services that are offered by mobile banking units to communities that have already been affected by branch closures. That is a matter of great regret. I think that we all agree that such closures are a body blow to communities across Scotland. They have left many areas with significantly reduced branch coverage.
Unfortunately, closure announcements continue, with Santander’s announcement being the latest. Link and the PSR have indicated that they will take into account the needs of communities that are affected by branch closures as, often, when a branch closes, an ATM—a vital source of cash—is lost alongside the branch services.