Our perceptions of banks need to improve (in more ways than one)
Writing about off-line payments on a digital blog feels odd. But the subject of today’s blog is the body of people who find digital or telephone banking hard , whether for logistical or temperamental reasons. I know these people , they put cash in the collection at Church, they bet cash with the bookies, they pay cash for fuel for Lady Lucy.
Lauren Langton who helped set up the Northumberland Community Bank wrote to me yesterday pointing out that the use of cash is not confined to the financially excluded.
Access to cash is so inextricably linked with financial inclusion and financial education. So many people are presumed to be financially excluded, simply because they prefer to use cash. The reasons for that are varied, but decreasingly because they can’t get a bank account, more usually because they don’t trust the banks, they can better manage their finances by paying in cash and more and more frequently because the infrastructure (bank branches, ATMs etc.) are much less accessible.
Lauren has worked with former Pensions Minister Guy Opperman. Opperman reacted to yesterday’s blog by reminding me how to find a post office when I need to pay cash into my bank account (First Direct customers can no longer use any bank branch to do this).
Lauren explains why it’s so hard to pay-in cash to a bank
cash is expensive to handle, so generally seen as a negative for the business models of these organizations. Sadly high-street banks don’t see this as their responsibility.
First Direct and the Post Office work well together but this has not always been the case. In 2019, Barclays tried to stop a service that allowed customers to withdraw and pay in cash to Barclays accounts using Post Office Counters. They backed down when Frank Field and the DWP Work and Pensions Committee criticized them for “penny pinching”. Barclays were objecting to the cost they had to pay to outsource this service. You can read about it here. (1)
Guy Opperman has been campaigning for those in his constituency (Hexham) to have access to banking and sees two solutions to the problem facing those who pay in cash
1. Post office needs a proper long term partnership with banks – in reality they both see each other as competitors and a cash cow: the Post Office needs better management
2. Mobile services are the future – ideally one in each major town on a rolling 5 day a week basis
How this works for financial services and state benefits.
The Consumer Duty is notionally confined to firms authorized by the FCA which means it doesn’t cover occupational pension schemes or the DWP’s Pensions and Benefits payment system. At a Pension PlayPen event yesterday, Keith Richards – who has set up the Consumer Duty Alliance, was urged by Margaret Snowden and others to include pension organizations in his campaign for better standards.
One of the key measures for those considering their Consumer Duty, is how firms treat vulnerable customers. “Payments” forms a large part of this. For authorised firms, ensuring that customers get paid claims or have means of paying premiums for products falls under the Consumer Duty and the Banks , Credit Unions and Fintechs fall within its scope
Indeed the Post Office is Authorised and regulated by the Financial Conduct Authority (FRN 630318). Registered in England and Wales. Registered number: 08459718.
The DWP works with the FCA , the Consumer Duty dominates large parts of the DWP’s current VFM framework consultation. The payment of claims is likely to corm part of the “Quality of Service” test, pensions will need to pass to continue to offer services in the future.
The DWP has been good at ensuring that those who do not have online banking because they don’t even have a bank account, can access pensions and benefits in cash.
I wrote yesterday about the PES (Payment Exception Service) that Guy Opperman saw in in his time as Pensions Minister. It is working and working well – credit to a department that takes a lot of stick on pension administration.
With 700,000 savers a year, finding themselves able to access their pension savings through the pension freedoms, the DWP would do well to ensure that the Payment Exception Service is available not just to the payment of state but private pensions. This means working with the FCA and ensuring that schemes overseen by the Pensions Regulator are on top of their obligations either under the Consumer Duty or under Value for Members. In the longer term, the Value for Money framework must monitor and flag that this important aspect of service quality, is met .
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“… people who find digital or telephone banking hard , whether for logistical or temperamental reasons. I know these people , they put cash in the collection at Church, they bet cash with the bookies, they pay cash for fuel for Lady Lucy.” Yes – and the people who are so scared by all the stories about scams and the attitude of the banks and others to losses that they are terrified to trust any on-line banking.
Once upon a time, when money was stolen from banks, the police searched down the villains and they were prosecuted. (OK, I’ve been watching too many re-runs of The Sweeney…) It’s not apparent that the same level of effort is used today to track down the online robbers who steal money out of accounts, rather by men in masks blagging a security van.
As an aside to this, the withdrawal of bank branches may have an effect on business too – a recent visit to a local shop found they did not take cash, because, they explained, there was no local bank branch to deposit it in.
People still like to use cash for budgeting.
https://www.nationwidemediacentre.co.uk/news/note-to-self-cash-usage-rises-for-first-time-in-13-years-amid-cost-of-living-crisis
I went to bank some cash yesterday and was told by staff that refused to take it, that HSBC are withdrawing the counter facility from many branches and will be withdrawing the night safe facility form all branches over the next year or so.
Retaining a branch doesn’t mean retaining cash handling.