Banks could face fines or be blocked from closing branches under plans to protect cash use.
City watchdog the Financial Conduct Authority (FCA) is reportedly considering new rules to stop banks from shutting high street branches to ensure consumers and businesses can still access cash.
It comes as more than 4,200 branches have now shut since 2015 – with 801 closing since lockdown restrictions were enforced in March last year.
Campaigners have long called for urgent action to preserve coins and notes for the millions who rely on them.
Chancellor Rishi Sunak pledged to introduce laws to protect cash access last year, and last month the Treasury finally launched a consultation into how the legislation could work.
Proposals include handing the FCA powers to fine banks that shut branches where they are most needed, and the regulator may even be allowed to enforce injunctions and stop some closures from going ahead at all.
The plans could also see nine out of ten neighbourhoods given the legal right to be within 0.6 miles of somewhere they can take out cash free of charge.
The consultation will run until September 23 but any new laws could take at least two years to enforce.
Industry experts have told Money Mail that the Treasury is unlikely to view cash machines as an equal replacement to the face-to-face service branches offer.
The consultation also aims to ensure ‘reasonable access’ to places where people can deposit cash – a service which most ATMs outside bank branches do not provide.
Gareth Shaw, head of money at consumer group Which?, says: ‘The government’s proposal to put the FCA in charge of the cash system, including holding industry accountable for providing access, is a vital step. As cash machine and bank branch numbers continue to decline sharply, the government’s legislation plans cannot be introduced soon enough.’
A Treasury spokesman said: ‘We know that cash remains vital for millions of people and we are committed to protecting access to cash across the UK.’
A UK Finance spokesman said growing numbers of customers were turning to new technology to manage their money, including online and mobile banking.
But he added: ‘Technology is not for everyone and bank branches continue to play an important role in the life of local communities, meaning decisions to close them are never taken lightly.’
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Watchdog looking at fines for banks to stop high street closures