Pwyllgor yr Economi, Seilwaith a Sgiliau - Y Bumed Senedd

Economy, Infrastructure and Skills Committee - Fifth Senedd


Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Bethan Sayed
Hefin David
Russell George Cadeirydd y Pwyllgor
Committee Chair
Vikki Howells

Y rhai eraill a oedd yn bresennol

Others in Attendance

Greg Lewis Rheolwr Cynnyrch Bancio, Swyddfa’r Post Cyf
Banking Product Manager, Post Office Ltd
Mary Buffee Pennaeth Materion Defnyddwyr, LINK
Head of Consumer Affairs, LINK
Michael Norman Materion Allanol, Swyddfa’r Post Cyf
External Affairs, Post Office Ltd
Sue Jude Cyfarwyddwr Rhanbarthol Cymru, Y Ffederasiwn Is-bostfeistri Cenedlaethol
Regional Director for Wales, National Federation of SubPostmasters
Thomas Docherty Pennaeth Materion Cyhoeddus, Cenhedloedd a Rhanbarthau, Which?
Head of Public Affairs Nations & Regions, Which?

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Ben Stokes Ymchwilydd
Lara Date Ail Glerc
Second Clerk
Robert Lloyd-Williams Dirprwy Glerc
Deputy Clerk

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Dechreuodd y cyfarfod am 09:37.

The meeting began at 09:37.

1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau
1. Introductions, apologies, substitutions and declarations of interest

Croeso, bawb, i Bwyllgor yr Economi, Seilwaith a Sgiliau.

Welcome, everyone, to the Economy, Infrastructure and Skills Committee.

I'd like to welcome Members to committee this morning. We move to item 1. We have apologies this morning from Joyce Watson and Jack Sargeant, and we do still have two vacant seats on the committee at the moment as well. Are there any declarations of interest? No, there are none. 

2. Papurau i'w nodi
2. Papers to note

In that case, I move to item 2. We have a number of papers to note this morning. 2.1 is correspondence from Transport for Wales regarding the Valleys lines. 2.2 is—[Interruption.] Yes?

Just regarding the letter from Transport for Wales, I think it's very welcome, the clarity that Transport for Wales has provided with regard to that line. I can say from experience and from speaking to constituents in the Caerphilly constituency, we have actually seen improvements on the line, and the increase in carriages has happened as they have said.

One issue is that there is only one peak-time service now, and there are two carriages. But, I would recommend that the committee continues to scrutinise this because the loco-hauled service is a temporary solution and we are looking to see further improvements. So, this is a point-in-time letter, and I think that we need to continue our scrutiny of this.

Yes. Thank you, Hefin. Of course, we are taking further evidence from Transport for Wales later in the autumn, ahead of the autumn period again. So, yes, absolutely. Thank you, Hefin.

2.2 and 2.3 are letters from the Minister for Economy and Transport regarding Transport for Wales and general scrutiny action points. 2.4 is a letter from myself to the Finance Committee Chair regarding retention payments and working together. 2.5 is the Welsh Government's response on research and innovation—our piece of work on that. Perhaps, Members, we could discuss that later in the meeting if we think that we need to. 

3. Mynediad at Fancio: Mynediad at Wasanaethau
3. Access to Banking: Access to Services

In that case, we move to item 3. This is our first formal session, although we did take evidence last week informally from the Principality and Nationwide building societies. This is our first formal session with regard to our piece of work on access to banking and access to banking services. We have a panel this morning in front of us and I think it would better if you introduced yourselves for the public record—save me going through every one. So, if I could start from my left.

Good morning. My name is Thomas Docherty. I'm head of public affairs for nations and regions at Which?.

Good morning. Sue Jude. I'm with the National Federation of SubPostmasters—director for Wales.


Morning. Michael Norman from Post Office Ltd, external relations team.

Good morning. Greg Lewis from Post Office Ltd. I'm the commercial and product manager looking at department banking.

Okay. Well, can I thank you all very much for being with us this morning and for your written evidence also? It's greatly appreciated. And if I could ask a few general questions before we go into more detailed questions from the other Members—. Perhaps if I could ask a couple of you just to outline the extent to which banks have closed in Wales, perhaps over the last five to 10 years, and also how that may be different to other parts of the UK. Does anybody want to open up—?

Do you want me to—?

Thanks very much, Chair, and thanks very much to the committee both for the invitation and for taking such a keen interest in this important subject. I'll just explain who we are at Which? We're the UK's largest consumer organisation. We have 1.3 million members and supporters, 57,000 of whom live here in Wales, and we regard the—. The current situation on banking services is of deep concern, not just to our members and supporters, but I think to society as a whole. Consumers in Wales spend approximately £4.5 billion every month, and without that spending the Welsh economy would come to a halt, as I know this committee knows. It's vital that consumers have a range of banking services. There are lots of consumers who find it more convenient, who find it easier, to do their banking through online services or through phone banking, but, for a large proportion of consumers, banking in person or paying using cash is absolutely critical, and our concern is that over the last—. So, if I start from the start of 2015, between 2015 and 2018, more than 200 bank branches closed in Wales. That's more than 50 a year on average. I think we've provided the committee with a breakdown, but I'm happy to do that if I haven't, Chair, of those. We've also seen the loss of nearly 200 free-to-use ATMs, and the places in Wales that have seen the largest numbers of bank branch closures are the places—. Frankly, it's the more rural parts of Wales. It's the places with the poorer or poorest digital connectivity. So, our recent work on online connectivity showed that, in Brecon and Radnorshire, which has had more bank branch closures than anywhere else in Wales—it's lost 14 branches in that period I've outlined—40 per cent [correction: 45 per cent] of households could not access the current USO, the universal service obligation, minimum speed for broadband. So, clearly, there is a double whammy there of loss of bank branches and not being able to use alternative forms of banking service.

Can I just make a point—[Inaudible.]—200 free-to-use ATMs? In the response that we had from LINK, they said that those were only closed in 'over-provisioned urban areas' and that only happened in the last year. So, is it something that you're overly concerned about in terms of that particular figure of those closures, or is it something that you're more relaxed about, because it's an over-provisioned area?

If you want to check—shall I come back to you in a moment?

I just want to see, Chair, if I may—. If I look—. So, if you look at our evidence, appendix 2b, we've broken down the number of ATMs per head by constituency. So, it's probably fair to say that—. So, at one end, I think Cardiff Central, as you would expect, in a way, Chair, has the largest number of ATMs to begin with. It is not seeing the same level of loss as we're seeing in more rural parts of Wales. So, the basis is much higher in urban Wales and is—you know, absolutely, we're not talking about an individual ATM going, but, when you're losing 200, and that was just in the last 15 months—. When you're losing 14 bank branches in a constituency and you're losing ATMs, then it is that cyclical effect.

So, you wouldn't agree with their analysis. I'm trying to understand what your view is, compared to what they're saying.


We think that there is a real danger that we are heading towards a cashless society and that more needs to be done by LINK and by the regulators to tackle that, if I'm being diplomatic about it. 

And if I look to other colleagues on the panel, if anybody wants to take that question as well, and perhaps if I could perhaps add a question as well, to what extent do you think that banks are an essential public service? Sue Jude.

Banks, I believe, are absolutely essential. We have a number of vulnerable customers and also the elderly and infirm, those with disabilities, and they actually rely on banking services. Post offices—. The post office network that we've actually got geographically—we are so well-placed to actually provide these banking services, but, obviously, this has to be taken into account remuneration-wise as far as sub-postmasters receive pay. The payment to sub-postmasters currently, prior to the increase taking place—many sub-postmasters are actually only receiving approximately £2 an hour on that banking, which is well, well below the current wage. 

Members might come back in on some of those questions later. I just wanted to just get a general overview, if I can. Greg Lewis. 

Thank you. What I would say is that the Post Office Ltd does welcome the business that we've been able to pick up in the banking sector over the last probably eight or nine years, and in terms of, potentially, the reduction in ATMs, well, whilst we do not look to replicate the bank service in our branches, because, frankly, we can't, we do replicate the basic money coming in and the money going out function, certainly, of an ATM. So, whilst you could say that the number of ATM access points has been reduced, actually, if you look at the opening up of the post office network for the majority of customers—and we can service 99 per cent of personal customers and about 95 per cent of SMEs—actually, we've increased the access points quite considerably. If you then add that to the fact that our branches have gone through a network transformation programme, which has added additional hours of service—and we've got 500 that have gone through the programme in Wales over the last couple of years, adding, I believe, something like 17,000 hours a week, many of which are open on Sundays—actually, the access to cash through the partnership with the Post Office has widened it and created probably greater than the access points that they ever had before it was even in place. So, we certainly do welcome it.

I do stress, though, we cannot replicate what a bank does in its entirety, but we can certainly service the basic cash provision and needs, and, in terms of the vulnerable members of society, we can actually offer many benefits above an ATM. For instance, if you use our over-the-counter cash facility, you're not constrained to taking £20 and £10 notes out, which you are with an ATM, unless it's got £5 stock within it. You can actually have an exact amount that fits in with your budget and needs. Some customers—some students, for instance—may take out less than a tenner. So, we can offer that convenience, plus also talk a customer through the transaction, which they can't do on an ATM.

Okay. Some of the issues that have been raised other Members are going to pick up. So, I'm not going to come back at the moment. I'm just going to read just one statement that—. We had some evidence from Unite the union. I just want to read a statement that they provided to us in their evidence, and just if you could let me know if you agree with this statement or not:

'It is vital that the sector is forced to recognise its corporate social responsibilities to its customers, its staff and also to the local communities within which they gain their profits.' 

Is that something that you would agree with, disagree with, or not wish to take a view on?

What we would certainly agree on is that banking services are essential. They're essential to consumers and they're essential to the Welsh economy, and, for example—. Let's talk about—. If I may talk about cash, or access to cash, cash is still the second most frequently used payment method in the UK. That was the latest figure from UK Finance—who I think you've got giving evidence to you as well in a couple of weeks, Chair—and even they project that, towards the end of the next decade, cash will still be the second most frequently used form of payment in the UK by consumers. Therefore, it's absolutely essential that consumers, the customers, are able to access without charge their cash and that those customers who, for one of the many reasons that you may touch on later in the session, can't use online or phone banking, have access to a branch network.


Absolutely. We are a bit pushed for time; we've got a lot to get through, but if anyone wants to make a brief comment on the statement that I read out from the Unite union in terms of their evidence—anybody want to comment? No, that's fine. I'll move on. Vikki Howells.

Thank you, Chair. I've got some questions around the process and the decision-making process for bank branch closures, which is a topic that my constituents feel very, very strongly about, and I'm sure that you all understand how strongly the public feel about this. I'd like to kick off with just a simple question regarding your views on the operation of the access to banking standard. Any views there?

Conscious of being brief, 216 branches have closed, as we say. I cannot find many cases—perhaps the committee have—where a bank has proposed closing a branch in Wales and has then, as a result of going through the access to banking process, not closed the branch.

I don't think that is—. There was a debate, actually, in the Assembly Chamber a year or two ago in which I think one Assembly Member said, 'Has any AM here ever been able to stop a bank closure?' and the Chamber was silent. So, I think that answers that question, yes.

If I can just pick up on your point, then, we've taken some evidence from a range of stakeholders, but specifically I'd like to mention the evidence that was put to us by the Church in Wales regarding the reduction of bank branch hours and how that then creates a vicious cycle, really, whereby it enables that bank to say then, a year or two years down the line, that footfall has decreased in the branch and therefore the branch is not viable. I've experienced this in my constituency, and I'm sure that there are people up and down the country who've experienced it in their constituencies as well. Do you think that there should be a process of consultation for banks when they are proposing to reduce their opening hours so that the community has a say at that stage?

As I say, we think the access to banking standard needs to be reformed, and that certainly needs to be part of it. All I would observe is that the word 'consultation' means different things to different people, and I think it would be very—it's critical that we all understand what we mean by 'consultation'.

Is it an information exercise or a genuine consultation? Yes.

And, certainly, whenever I have spoken to representatives from the banking sector when they have closed a bank without consultation, the No. 1 issue that I've been asked to put to them by my constituents is: why didn't they consult? The response is always the same—that it's a business decision, it's a commercial decision, and so on. So, to what extent do you think that the impact of closures on local communities and businesses is truly taken into account by banks themselves when they're making that decision to close?

Can I bring in any other Members at all—any other witnesses?

I think it's difficult for us, for the Post Office, to comment on some of the banking issues. It's more about what we can offer as a result of a bank closing in a community, obviously, in many rural communities in Wales. From our point of view, going back to the consultation, if we're moving a post office or we're having to close a post office, then we go into public consultation. I couldn't specifically comment on why banks don't do that. But, really, from our area, it's—as Greg said, we don't say that we will be able to replace a bank that closes, but we can offer the community access to cash, which I know is a major issue for customers across Wales. But, yes.

What I would say as well is that there is—. This is part of my day-to-day job, and I would say as well that, in the last couple of years, we've got much closer to the banks that are making closures to make sure that, if that closure is happening, there is a much better transformation over for those customers who want to come in and use the post office for an over-the-counter facility because we're nearby to that closing branch—better than it's ever been. I still believe we've got a way to go on awareness. I still think that awareness figure is far too low, and I still think we can improve the communication out to customers to say, 'Well, if this was the way you handled it in a bank branch, it's slightly different when you handle it in a post office'—to do it that way. So, I couldn't comment on the consultation piece and the impact there. All I could say is, on a genuine level, we are working much closer with the banks to make sure the transition of customers who want to use us is far improved than what it was perhaps four or five years ago.


Okay. Mr Docherty, if I could come back to you, then, with a question about to what extent the banks actually take into account the impact of closures on the local community, or should we be expecting them to take that into account? Because it seems to me, from my conversations with the banking sector, their view of it is the opposite way around. We took some evidence last week, where they talked about the health of the high street, and if the high street was in poor health, then that would be one of the reasons for them pulling out, whereas you speak to people in that community, and their view is very much the opposite—that if a high street is flagging, they believe that a bank has a moral and social responsibility to stay there to assist businesses. What would you say to that?

I would say, first of all, it is both branches and ATMs together, because ATMs are part of the banking service, and the financial institutions are not doing enough to consider the impact of whether it be the branch or the free-to-use ATM being withdrawn, and, as you talked about before, what we call this disruptive cycle that goes on.

Part of the problem, though, Chair, is it's not just about an individual financial institution, it's that we have a fragmented regulatory sector. So, we have three different regulators responsible for different parts of banking services. We have the Financial Conduct Authority that's responsible for bank decisions, that oversees the banks' decisions. The payment service regulator oversees decisions about ATMs, and the Bank of England then has this overarching regulatory responsibility for making sure that money continues to flow around the Welsh economy. So, we don't even have a regulator who's got responsibility for challenging institutions to say, 'Well, what's going to happen in Montgomeryshire? What's going to happen in Rhondda? What's the longer term impact?' So, it's not just the individual institution, it's the regulators overall that, we believe, need to do more.

That's very interesting, thank you. One final quick question, if I might, Chair. We've taken some evidence from the Federation of Small Businesses who cite instances where the information signposting customers towards alternative banking services such as the nearest post office has been out of date or inaccurate. Mr Lewis, you said that you felt that there'd been an improvement in the dialogue between banks and the post offices recently. So, does that kind of evidence reflect your experience on the ground, either historically or now?

As I said earlier, I think most customers would know where their local post office was and where the ones in the surrounding area are. Perhaps the challenge that we've had in the past, which we are cracking, is that you do things slightly differently to do your banking transactions in a post office to the way that they're done in the bank. For instance, the way that cheques are presented to us is different than how you would present cheques into the bank branch if you're depositing them into your account. That's the challenge that we've had that I believe that we're overcoming, both in terms of making sure that the banks communicate to their customers effectively the way that it's slightly different in the post office, rather than the onus on us, when the customer comes in, to experience disappointment in terms of the way they present their service and saying, 'Sorry, we can't quite do it that way; we need to do it a slightly different way from you.'

I was going to say, in terms of the accessibility to post offices, one of the things we are working on is updating our search facilities for Post Office, and one of the things that we will be launching shortly is joining up with the ATM location finder to say where the nearest over-the-counter facility is as well—to join that, to make that more accessible.

And would that be an online service, then, to locate?

It is, yes. If you're in a different area of the country than you normally are and you need to get cash, it will point you towards a post office as well as pointing you towards an ATM.

Helpful for those who are online but not for those who are not.

If I could just add something there, if that's okay. When a bank does close, we do contact the branch manager of that local branch so that they make their customers aware of the services that are available at post offices. And I believe that they also write to the customers and tell them where the post office is. Some of the work we've done with the chair with regard to seminars, advising people of banking services and what they can do at the post office is also helpful, I think.


Can I just ask a question, Mr Docherty? Going back to the question before last, you outlined the complications of the three different regulators. So, what should happen?

We very much welcomed the UK Government's announcement of the establishment of the joint authorities cash strategy group, and we hosted a cash summit yesterday in our headquarters, with the Treasury and Natalie Ceeney and others. We are calling for some urgent action to—how can I put it—try to arrest the decline of both the free-to-use ATMs and the bank branch closures. We would like to see—in fact, we think it's absolutely crucial that there is a statutory duty to protect access to cash. That's the single most important thing that we need to see. At the moment, the regulators don't have that, the Treasury don't have that and institutions don't have that.

Okay. But you think that there should be a further regulator. I'm just trying to—. There are already three regulators. I'm just trying to—

That has been our position. We don't want to tie the hands of the Treasury and the JACS group that has been established. If there is not to be a single regulator that has responsibility, then the alternative would be a statutory duty to ensure that cash remains part of the economy.

I'd like just to explore the pieces of evidence we received from the National Federation of SubPostmasters and from Which?. I'm just going to compare the two pieces, and I'm not trying to catch anyone out or anything like that; I'd just like to get some understanding of some differences in the evidence and see how we can move forward with that. So, I'll come to Which? first and then I'll come to you, Sue Jude, if that's okay. So, Thomas Docherty first.

In the National Federation of SubPostmasters's evidence, it said:

'We show that there's a ready-made solution in the form of the post office network, which has the facilities to provide banking services, and the geographical spread to ensure that those who have been abandoned by their banks do have an alternative'.

And the statistics that have already been mentioned by Greg Lewis:

'95 per cent of small business banking customers can access their high street bank account for; 99 per cent of and building society customers can use post office counters'.

But in the Which? evidence, you've said:

'the Post Office does not fill the gap a local bank leaves when it is removed from a location, and it cannot be considered a like for like'.

And in it you say:

'People also cannot transfer money from their account, or seek advice or make enquiries about savings, current accounts, credit cards, mortgages, and personal loans or investments.

And you say:

'Post Offices are not yet a robust alternative for people to do their banking and manage their everyday finances'.

So, first of all, can I ask—I'm sorry for the length of that piece there, I normally try and be succinct, but I think it's important to explore that evidence? Can I ask Thomas Docherty, first of all: can you just expand on that evidence? And then, Sue Jude, I'll ask you to come in and respond to that.


Yes. If I may, Chair, I'll just refer to the Post Office's evidence as well, in paragraph 22:

'Post Office is not intended to replace a full bank branch—we provide basic cash in and out transactions'

et cetera. So, I think that's our response. I mean, there is a greater role—we absolutely argue that—for post office branches. Absolutely. We're not against. And as we said in our evidence, and as you've touched on already, there are some reasons. Some of those can be addressed, to an extent, around lack of staff expertise, about queuing and about—. I mean, some of it is physical, though, if I may, as well. Would you feel comfortable—not you individually, but would you, as a customer, feel comfortable going into a post office if you had a query about your bank balance, particularly if it was likely to be, as mine often is, in the red? So, how can that be addressed would be the type of thing we would say.

And, just before I come to Sue Jude, in your evidence, you said, Thomas Docherty:

'Post offices are not yet a robust alternative'.

What you're saying now suggests that they can never be, but in the evidence you've provided it suggests that it could happen in the future.

I'm reluctant to speak on behalf of the Post Office about to what extent they have—. Look, I'm an optimist—

Is it realistic to expect the Post Office to be able to fill the hole left by banks in the future, with some form of Government action?

I think there are more things that the Post Office can do, working with financial institutions, and depending on the location. But I think we would be—I think this genuinely is a question more for the Post Office: to what extent is it ever going to be a like-for-like replacement? We would be cautious.


Okay. I'd like to invite Sue Jude to contribute, though, because it was your evidence I was referring to, the National Federation of SubPostmasters. Can you respond to that?

Yes, I can. From what Michael said earlier, continuing—we do have a unique spread as a network in terms of geography throughout the country, to service customers with general banking, basic banking. The one thing I think that we would like to see is increased services, obviously not going in depth. Savings accounts we do not cover. Credit card payments—we do get numerous ones of those brought to the counter, and we can't take the payments for them. It would be a standard service to just take the payment—

Well, these particular things—Post Office has removed paper transactions, apart from cheque deposit envelopes. So, basically, everything is either scan or it's a chip card. If a barcode was put on to these credit card payments, we would be able to take considerably more transactions over the counter, which would help the customer.

Well, I would have thought Post Office Ltd would have dealt with that with the banks.

If I can take that one, the reason we don't take credit card payments for some institutions is that we have no commercial agreement with that institution to be able to accept their payments across our counters. Do my colleagues in the payments team chase those companies to do that business? Absolutely they do. Sometimes, it's just a commercial decision from the likes of Barclaycard and similar credit card companies that they're quite happy with the mechanisms that they give their customers, because most institutions would want to encourage online payments as a cheaper way to collect their payments from the customers. We absolutely try and chase it. Some we do, we do via some of our different transaction types with what we call internally the head office collection accounts. There are some means by which we can do it, but, generally, yes, that is business the Post Office would like to get, but it has not been perhaps as successful as we would have liked in securing those payment contracts.

Can I just pick up on one point Mr Docherty said, though, about balance enquiry, because that's a really good example? As I mentioned in the introduction, I'm a commercial manager. Part of my role has been signing up the banks to the banking framework in the past, and there was some reluctance from some of the banks to do business with us, because they saw us as a competing institution that would try and poach their customer savings, where they would like to have that in their own domain. So, when I would demonstrate our services and the transactions that we offer to those banks through a visit to our model office, we would actually show what the clerk sees when he processes a balance enquiry transaction, and it would prove that the clerk does not see the balance. The balance is only printed on the receipt, as Sue mentioned earlier, and that receipt is face down to the customer, so the clerk has no knowledge of how much is in that customer's account.

Just with that in mind, one of the things that Mr Docherty raised was operational capabilities in individual post offices—would you feel comfortable using a post office in the same way you would use your bank as an ordinary customer? The federation of sub-postmasters actually raised that and said they do have concerns:

'without further support there is a risk that individual branches...may struggle to cope with some of the consequences of an increase in banking transactions'.

So, are you saying that that is something, actually, you could resolve?

Absolutely. It's not on Mr Docherty's point in terms of the wider services that a bank would offer them and we can't offer—that you need that financial expertise. I'm not talking about that. What I am talking about, though, is being able to process high-value deposits a little bit quicker and a little bit more securely in branches. Absolutely we can tackle that, and we're looking at tackling it through self-service machines, through fast-drop facilities into branches that mirror what banks can do, and supporting our agents and our network of post offices with the right equipment to be able to do that in branch. There are a range of projects going on there to make sure that the increase of banking transactions that we've got, specifically in business banking customer deposits—high-value deposits—don't create queues in post offices, we don't create issues with security and we don't make ourselves a target. 


With regard to the question I asked, Mr Docherty was fairly clear that post offices are not going to be fully—. He said 'not yet' in the evidence—that they aren't going to be fully able to take over the responsibilities that the bank currently has. Would you disagree or agree with that? 

I would say that we don't seek to, Mr David, in the full capacity that a bank branch would—

That's not what we're trying to do. That's not to say that we wouldn't expand some of our service, for instance to help out with identity requirements, where somebody previously has gone to a bank to produce documents. We may take on those sorts of functions. We may look at some other periphery, but we're not talking about the full financial advice that you would get from a branch with a specially qualified expert.  

So, for business services, it's always going to be more limited in the post office than—. 

I think in point 21 of our written evidence we lay out the reasons for that, and point 22 where we actually make it clear that we're not trying to replace a full bank.  

And then the question—. Because I tweeted something about this over the weekend, and somebody said, 'Post offices can do it; you don't have to worry about bank closures', so we actually know that that falls some way short, and it's good that you've acknowledged that. We are looking to talk to the Government about what they should be doing. Is there anything the Welsh Government can do to assist in making you more able to fill the gap left by banks? 

I would love to work with you to raise awareness of what we can do and what we can't do. 

Okay. So, basically, not doing anything more than you're currently doing, but raising awareness of what you're already doing. 

Yes. And to explain that, Mr David, I've been working in the banking sector for Post Office Ltd since about 2010, and in 2010 and onwards through those years, there were banks that we could not handle cash withdrawals for, or we might have some banks that we could do cash withdrawals for, but we couldn't do cash deposits for. With the launch of the banking framework, we've had a real push to standardise the services and make sure that we offer it as widely as possible. One of my remits is talk to the new challenger banks to try and get them into the banking framework so that we can offer those services as well. But awareness, even though we've been doing what we can, is still low. It's still low amongst my friends, and it would be interesting to go around the table to see, actually, how many people have accessed their own bank account in the post office and tried it. 

I think as a constituency Assembly Member who's seen bank branches close, when you say a constituent, 'Ah, but you've got your post office', they say to you, 'I don't bloody want to use the post office'. So, the reaction can be quite strong. You need to be thinking about how you frame that. We need to understand exactly what you're offering, and then that needs to be framed in a very clear way so that people know that they have confidence, and I think that's what Mr Docherty is saying. Have I got time to go on to—?

That's fine, yes. We'll go over a little bit, I think. 

Just the coverage. Okay. So, I'd just like to explore as well the Post Office's network in Wales, because it's pointless to talk about the Post Office and the gap with banks if your coverage isn't the same. So, can you just explain what your strategy is in, for example, rural areas of Wales? 

The network in Wales is at its most stable for decades. Nationwide, there's 11,500 post office branches. There's 930 in Wales. We believe we're at the heart of the community for banking. Ninety-three per cent of the population live within one mile of a post office branch. In areas that are more rural, we offer things like outreach services where we would go into a public building, or a mobile van will also visit those communities. So, the actual range and scope of our network is very good. 

And that goes above and beyond what banks would do in those circumstances. Is that right? Or is that something that—? The kind of outreach you're talking about. 

Certain banks offer mobile services. I'm not sure about Wales, but certainly I have heard of mobile banking services. 

Okay. And the last question from me. One of the other responses I got when I said—. 'Do we need a community bank of Wales?' was the question I asked, and people said, 'We've got credit unions'. Credit unions provide an awful lot of services that banks that are leaving can do. There are questions around that, but you've mentioned in your evidence—. In paragraph 34, 'Post Office Relationship with Credit Unions', you say that

'Two credit union ‘aggregators’...are developing propositions for their customer Credit plug into the national payments infrastructure alongside far larger financial institutions. This is a step-change for the industry and will open up a range to credit union members.'

Are we seeing credit unions, in a relationship with the Post Office, becoming something different as a result of bank branch closing?


I'm not sure whether it's as a result of bank branch closure, but, effectively, in reference to that specific point, the Post Office's system that performs banking transactions works on a number of standards, and the standards that the credit unions were offering to their customers, and the means by which they would conduct their account, might have been primarily paper based or account book based, which is not what we handle as part of our banking transactions. So, where the aggregators have come in, Mr David, is to basically equip those credit unions with a means by which to access our services. 

Okay. And that's what you mean by the relationship—extending the banking framework relationship to credit unions. 

Yes. So, by them, for instance, providing a card-based account, they can then access the full network of 11,500 post offices to get money in and money out, not constrained to the credit union access points that they have in their locale. It basically treats them the same as any other bank. 

Can you just give me a timescale for how these changes are happening, and when?

Imminently, I would say, on the basis of—. For the one of the institutions that's mentioned in the paper, we have developed our front end. We are just waiting for that back-end development, and the settlement systems to be put in place, to enable it to go live. For the other institution, they are still building that back-end interface to allow them to receive the information of the transactions that we handle on their behalf. So, pretty soon. 

Jest i ofyn ynglŷn â'r cwestiwn yna yn benodol i Greg Lewis, ydy hwnna ar gyfer pob undeb credyd, y cytundeb hynny, neu dim ond y rhai rydych chi'n gweithio gyda nhw ar hyn o bryd? Achos dwi'n ymwybodol bod undebau credyd yn amrywiol iawn o ran eu gallu i gynnig gwasanaethau yng Nghymru. Roeddwn i jest eisiau deall hynny. 

Just to follow up that question specifically to Greg Lewis, is that for all credit unions, that agreement, or is it just the ones that you're working with currently? Because I'm aware that there are credit unions that are very varied in terms of their ability to offer services in Wales. So, I just wanted to understand that. 

Well, it depends—. The number of credit unions would be the ones that that particular aggregator has signed up to their proposition. So, the Post Office is looking to work with as many credit union aggregators as possible, so the onward reach for the credit unions that they associate with expands. And we, by having a relationship with more than one aggregator as well—we're not favouring any particular aggregator that a credit union should join. So, we want to be in a position to say to credit unions, 'Yes, if you go with any on this list of aggregators, that will open up the full network access for your customers.'

Os mae'n bosib, fyddem ni'n gallu cael nodyn i esbonio hynny? Byddai hwnna'n help i fi o leiaf—nodyn ychwanegol ar sut mae hwnna'n digwydd. 

If possible, could we have a note explaining that for us? That would help me at least—an additional note telling us how that happens. 

Mae lot o'r cwestiynau ynglŷn â mynediad at arian parod wedi cael eu gofyn, ynglŷn â phwy sydd yn goruchwylio pwy, so does dim angen i fi ofyn am hynny. Ond jest i Thomas Docherty, dwi jest eisiau gofyn, jest i fod yn devil's advocate, os ydych chi'n cael mynediad at arian parod yn statudol, ac wedyn, mewn 10, 15 mlynedd, dŷn ni yn dod yn wlad neu yn fyd sydd ddim angen arian parod yn ein llaw, beth fyddai'r angen am gael yr elfen statudol hynny yn ei le? Hynny yw, oni ddylen ni edrych at sut dŷn ni'n gallu arloesi a sut dŷn ni'n gallu gwneud pethau'n wahanol yn hytrach na ffocysu yn union ar arian parod? Gobeithio bod hwnna'n gwneud synnwyr. 

Many of the questions about access to cash have already been raised, in terms of who has oversight of this, so I don't need to ask about that. But I wanted to ask Thomas Docherty, just to play devil's advocate now, if cash access was statutory, and then, in 10 or 15 years, we do become a nation or a world where there is no need for cash in our pockets, what will the need be for that statutory element in place then? Would it not be better perhaps if we looked at how we can innovate and how we can do things differently rather than focusing on cash? I hope that makes sense. 

It does. I think that—. Two very brief observations, if I may. One is that new Which? research, which I'm happy to share, is that last year 12 per cent of people in Wales were left unable to use their cards for payments due to technical issues, and, underpinning the need for cash, there is the resilience of the alternatives. And when one very prominent credit card organisation had an IT failure last year, we came, according to themselves, and I think to LINK—but I wouldn't swear to that—we came within 48 hours of running out of cash across the UK, because people were obviously having to withdraw cash. I think we sent, Chair, the committee the clipping from earlier this week from Scotland, where Lossiemouth lost its last branch, lost the last ATM, and within days had run out of cash in the town. And I think we are sceptical that we will ever, frankly, get to a point where we won't need cash for resilience reasons, and the reality is that, for lots of businesses, cash is always going to be important.

But, look, cash is also important for particular groups of your constituents—I don't really need to tell you that—for vulnerable consumers and for those on low and fixed incomes. Cash is absolutely crucial for how they manage their money. There was a figure, I think it was from Post Office, which said that in convenience stores, 76 per cent of their payments are in cash, and part of that is because they are people on very fixed incomes who are using cash to manage. So, I think it's a very good question, but the truth is I'm not sure that we will ever get to a point where we will not need cash. But if this is just allowed to drift and if individual financial institutions simply make individual commercial decisions to close branches and to withdraw ATM services, then we could find ourselves in this very dangerous situation within a very few years in Wales. 


Dwi ond yn gofyn oherwydd dŷn ni'n gwybod bod lot o bobl ddim yn defnyddio cheque books rhagor ac maen nhw'n dechrau dod i ben mewn nifer o lefydd. Felly dŷn ni'n edrych ar y cysyniad o efallai fyddwn ni ddim angen arian parod, ond dwi'n deall fod y seilwaith ddim yna ar hyn o bryd.

Roeddwn i jest eisiau gofyn—. Dwi ddim yn siŵr ym mha dystiolaeth oedd e, ond rŷm ni i gyd yn gwybod ein bod ni'n gallu defnyddio beth sy'n cael ei alw'n cashback gan rai siopau, lle nad oes yna ATM. Oes yna le i ehangu ar allu siopau mawr neu fach i gael cashback, neu ydy hynny wedyn yn cystadlu gyda rhai ohonoch chi yn yr ystafell yma? Beth am ehangu ar hynny?

I'm only asking because we know that many people don't use their cheque books anymore, and they're starting to come to an end in many places. So, I wanted to look at this concept of, perhaps, us not needing cash, but I do understand that the infrastructure isn't in place at present.

I just wanted to ask—. I'm not sure in which evidence it was, but we all know that we can use cashback in some shops, where there is no ATM. Is there a possibility of expanding on the ability of shops, whether large or small, to offer cashback, or is that something that would compete with some of you in this room? Could we expand on that?

I'll take that one. In terms of cashback, effectively the reason why it happens is that the retailer wants to get rid of their surplus cash to avoid banking charges for the deposit of that cash. There is no commercial benefit beyond that, so it competes very much with our over-the-counter cash withdrawal service or with a cash service from an ATM, where there is a price to be paid by the owner of that particular customer.

Ocê. Felly byddai hwnna ddim yn help i chi yn benodol, wedyn. 

Okay, so that wouldn't assist you specifically, then.

It would compete.

Ocê. Cwestiwn sydd gen i i Which? eto, i esbonio pam ei fod yn galw ar y Rheoleiddiwr Systemau Talu i gynnal adolygiad o raglen cynhwysiant ariannol LINK a'i ymrwymiad ehangach i gynhwysiant ariannol, gan gynnwys y broses adnewyddu ATM gyfredol.

Okay. I have a question for Which? again, which is to explain why they call on the Payment Systems Regulator to conduct a review of LINK’s financial inclusion programme and its wider commitment to financial inclusion, including the current ATM replacement process.

We are concerned that the financial inclusion programme is under a great deal of pressure. We don't see LINK as the bad actor in this, but they are under pressure and, particularly as bank branches are closing, we are seeing more and more communities that are left with just an ATM, if they are lucky. And some of it as well comes back to—. I do it myself; we talk a lot about digital connectivity, but of course transport connectivity is also absolutely crucial. It is all very well saying, 'Well, there's another ATM that is a mile and half or two miles away if you need to go and get cash out'—that's fine if you have access to your own transport, but, again, I don't need to tell this committee this: your constituents who are most vulnerable are not in a position to be able to travel often two or three miles to the next community to get access. So, we think that the LINK financial inclusion programme, whilst it's welcome, is coming under incredible strain. There have been—I forget the exact figure—150 ATMs closed across the UK, which are actually in areas of high strain already. We have got more than 200 what we call 'cash deserts' now and they are overwhelmingly in the most rural parts of the United Kingdom, though there are some in the most financially challenged parts as well, but—sorry.


No, I just wanted to ask if you could say a little bit about the premiums as well, then, because there may be an ATM in an area but it doesn't have the premium attached to it. I'm not sure I fully understand it, but then that's just me and money. [Laughter.] If you can explain a little bit.

Yes, certainly—and I'm conscious of who you have coming in afterwards.

We are absolutely concerned about the premiums that are paid. We were very robust in challenging the proposal from LINK to cut the fee payments that were being made. And they have—

So, the fee payment comes from—who does that come from, then?

That comes from the institutions.

So, they pay—I forget the figure now, LINK will correct me—about 30p per—

Thirty pence, yes. And the proposal from LINK has been to cut those payments. It's back to the question much earlier, which was a very good question, about where are the ATM cuts coming. Well, they are coming in the areas that are generating less usage, because obviously the costs are higher. It's an obvious thing to say, but the more rural ATMs are the ones at highest risk because they have a low footfall. They require additional support not less support, and our view is that the protected status of ATMs is on a very limited number. Again, LINK will correct me if I'm wrong here. I think it's about 3 per cent of ATMs that are protected. If you consider your own constituencies, that is simply not the right balance at the moment. We think, therefore, more of those ATMs need to be—

And that would be for LINK to say that they want to protect them, or for Government or for the—

I think that's a really good question. We have struggled sometimes to get the full picture out of LINK and others. We absolutely think the JACS group needs to address that with LINK and with the PSR to say what the steps are that would be needed to guarantee the robustness of the ATM network in Wales for the next 10 years. I hope I've answered your question—sorry.

Yes—I'm learning as I'm going along, if I'm honest. So, I'll ask LINK.

The final, final question I have is: I've done a lot personally on financial inclusion and financial education and I struggle with the fact that there's still not enough happening in our schools and in our communities, I just wondered whether you had any views on what more the Welsh Government could be doing. Because, of course, with the new curriculum there's less prescription over what should be done, other than more, which is what some of us would like to see. So, how can you—? Because it's all linked, isn't it? Because if you have that empowerment of how you use and how you handle your money, then we'll be able to deal with these changes much more eloquently than perhaps we are currently. So, your views in that regard. 

Yes. The brief answer, Chair—'Absolutely, yes.' That should definitely be done—not just about handling your own cash, but we are passionate about making sure young consumers, consumers as a whole, understand how money works and how their bills, unfortunately, stack up quite early on, and the decisions that we make—for example, pensions, the importance of lifetime savings and so on. It is depressing how many consumers don't realise that they are going to have to start to save more than they are. So, I'd be happy to have a conversation as well offline with you about financial education for consumers. 

Can I just mention also to the Member? There are many, many youngsters who actually come into the post office and they're banking very small amounts—£5, £10—and they're actually banking these amounts and they're able to bank them through the network just to make sure that a payment going out of their account is actually covered. So, they're actually using us to top up in a lot of cases. We do come across that.

We're drawing to an end now. The First Minister, Mark Drakeford, has talked about setting up a community bank for Wales, with multiple branches across the country, face to face contact, the ability to open current accounts and give business loans. Is this welcome?

I would come again to something that I did actually say earlier: geographically, we are best placed to service customers.


So, you don't think there is a need for a community bank for Wales?

I would say not. No. I would say that this banking can actually be directed through the post office network. If you look at the figures, over 90 per cent in Wales live within one mile of a post office, and if you look at the cost in actually setting up a community bank—. And we've already got services, we've got staff that are trained to handle these customers.

Could a community bank do more than what the Post Office offer?

Can you take that one, Greg?

I've got to say, it probably could, potentially, fix the gap between what a bank branch can provide and we're not seeking to provide, but then, actually, just isolating it to that sort of function would be a very difficult business case, I should imagine.

One of the things that I was going to say as well is that you need to create an infrastructure to support it. When you mentioned earlier about cashback, cashback is only a service if that retailer has got some cash to use. We've got an entire supply chain making sure that post offices can both have the money that they needed to pay out, but also take that money away when it's getting to much for them to hold. To create that infrastructure around a community bank with a sizeable network would be quite an expensive challenge. And also, in terms of—if they are going to provide that financial advice, how are they going to provide it with impartiality regarding the particular account that they're going to advocate? If that particular community bank is servicing all the high-street banks from a single point, what are they going to—?

I think the suggestion was that it's a new bank and you would open a current account with that bank. That's the way I've understood it.

I saw it slightly differently, in, perhaps—in terms of the concept of the last bank in town providing services to all the banks that have left in that environment. So, that's where I was coming from with that response.

Absolutely. We're still looking for details ourselves as a committee about what that community bank model would look like. Thomas Docherty.

We are aware of the First Minister's interest. We have not been approached yet to give a perspective on what it might— 

By the Welsh Government. We think there are lots of challenges. 

I suppose the most obvious, going back to the question before, is, if we have concerns about the current ATM sustainability in Wales, what would a funding model need to be to sustain an ATM network? Expanding on my JACS answer from earlier on, one of our big asks for the JACS group is to review the ATM provision—the financial support for ATMs—in Wales and across the UK, as well as the sustainability of the network as a whole, and whether or not PSR should be stepping in to fund directly, and also to regulate the interchange fees. The question is, well, if you had a community bank, would that be something that it would be looking to do—to be a bank of last resort in communities? Forgive me—we don't have lot of detail as to what the vision is for what the community bank is supposed to be. Is it supposed to be a version of a credit union for Wales? Is it supposed to be to provide communities that otherwise wouldn't have banking facilities with the provision?

We don't have a great deal of detail yet either, but as we understand, it's a community bank model with face-to-face banks across Wales with a first bank opening before the end of this Assembly. That's the only detail that we have yet, to date, as a committee. But you talked about what the challenges are of setting up a bank. So, can I just press you on that? What are the challenges of setting up a community bank, with face-to-face branches?

Is it 'gosh' because there are a lot, or you don't know where to start?

Yes, there are a lot of challenges. It's not an area that we are particularly engaged with yet. All I would observe is that lots of financial institutions are taking what they say are commercial decisions to withdraw from communities. So, there is clearly a financial undertaking that you'd have to do.


If I could help—we spoke to the Principality and Nationwide building societies last week, and they told us it would be hugely costly and unviable without large amounts of public subsidy. So, are you saying you would agree with their position? That sounds like what you're saying—I don't want to put words into your mouth, but it sounds like what you're saying.

Yes, I stress we haven't given this a great deal of attention, but it would involve a significant amount of money to set up a community bank, and that is a political decision.

Okay. Does anybody else want to take any further comments? Greg Lewis.

I'd agree—very, very expensive.

Okay. Is there anything—? We will be reporting and making recommendations to the Government on our piece of work. Is there anything that you think that we should be recommending, or anything that you want to say that's not already been said and drawn out through questions at all, or any closing comments that you briefly want to make?

Chair, very, very briefly, there needs to be strong leadership on protecting banking services. So, it is maintaining the right mix. So, for those people who wish to do their banking online or through phone banking, they need to be supported. The bit that I cover a lot of is on the digital connectivity. One of the key things the Welsh Government can do—and this committee has already covered this in previous reports—is the roll-out of digital connectivity needs to continue, if not increase. As I say, when somewhere like Brecon and Radnorshire, which has had the highest level of ATM closures, the highest level of bank branch closures, also has the poorest digital connectivity in Wales, the Welsh Government can do a lot on that. The Welsh Government also can use its influence to press Treasury and the regulators to do more to protect, for those who wish to use face-to-face banking services, for those who need or want to use cash, that action plan that JACS needs to produce by the summer.

I mean, I would just say, obviously, that post offices are still in a great position to provide basic banking services, such as cash withdrawals and deposits et cetera, et cetera. Obviously, there is a need on the wider banking front, where, at the moment, there seems to be a bit of a gap. But, certainly, from Post Office, we would like to say that people can use post offices for a number of their banking needs, many of their banking needs. So, I would just make that point, rather than anything else.

I think it would save an awful lot of cost to expand on what we already offer as a post office network, and, basically, we still come back to the fact that, socially, many, many members of the public prefer to come into the post office, even rather than using ATMs. ATMs are quite good—we have one ourselves—but I think they still prefer to come into the post office, and, actually, because it's traditionally been there for many, many years, it's something that is a trusted brand.

Okay, thank you. Unless Members have got any final questions—in that case I draw this session to an end. Can I say that if you do want to—? Review the Record of Proceedings, and if you do want to add to anything you've said or correct anything, please let us know, and if you listen to the rest of our evidence throughout our inquiry and you've got further comments, then please do comment as well. And can I thank Mr Lewis for agreeing to supply the additional information that Bethan Sayed asked for?

We'll take a 10-minute break and we'll be back at 10.50 a.m.


Gohiriwyd y cyfarfod rhwng 10:39 a 10:54.

The meeting adjourned between 10:39 and 10:54.

4. Mynediad at Fancio: Mynediad at beiriannau ATM
4. Access to Banking: Access to ATMs

And we move to item 4 in regard to our inquiry on access to banking. This session is in regard to access to ATMs, and I'd like to give a warm welcome to Mary Buffee, who is the head of consumer affairs at LINK. So, thank you very much for travelling across the country to be with us. We're very grateful for your time this morning.

In your evidence, you say that, 

'access to cash for free for consumers is a vital national service'. 

That was the view you gave in your evidence paper. Is that the view of all banks, ATM operators and regulators?


So, LINK is—. Would it be helpful if I gave some background around who LINK is?

So, thank you for inviting me, first of all, to give evidence. It's a pleasure to be here. LINK is a not-for-profit organisation. We are run by an independent board and we have a public interest remit. Our role is to run the network that connects all ATMs and cardholders together. So, it basically enables you to go use an ATM that doesn't belong to your bank.

We have made some steps to commit to maintaining the coverage of free-to-use machines because we do believe it's vital for consumers, and our members have committed to that as part of their membership of LINK, but we do believe that the measures we have taken will hold the network together in the short term, but that given consumer demand for cash is in long-term decline much faster than we'd, perhaps, envisaged it would be, that action now needs to be taken to think about the long term. So, we very much welcome the Access to Cash Review recommendations about structural change and about action being taken to preserve that for consumers. So, LINK does believe that it's vital for consumers, and that whilst consumers are moving to other forms of payment, we mustn't sleepwalk into a cashless society and leave groups of consumers or certain geographies behind. 

And do the big banks and other ATM operators and regulators—do they agree with your view?

So, our members choose to be part of LINK. So, if you're either an ATM deployer, a card issuer or both, it is entirely optional as to whether you wish to be part of that free-to-use network in the UK, and, currently, our membership stands at 36. So, as part of their membership of LINK, they obviously commit to that commitment around coverage. 

And what do you think are the consequences of—? As we move to a cashless society, what are the consequences of that for the consumer who, perhaps, isn't moving at the same pace as others? 

So, I think that there'll always be early adopters of certain types of technology like digital payments and contactless and those sorts of things, but there are over 2 million people in the UK who use cash for their day-to-day purchases, and I think it's important, until there are digital solutions for those groups of consumers, that the ATM network and other access points for cash are available to enable them to pay day-to-day whilst those digital solutions are being developed and are fit-for-purpose.

In a way, I suppose it's an obvious question and an obvious answer that I'm just trying to draw out of you, but if we didn't have those ATMs and we didn't have access to that cash, for those 2 million people that you talked about, what would be the consequences for them?

Exactly—their day-to-day lives would be impaired. So, they would struggle to spend money unless there were digital solutions. And, so, it would have a very material impact on their day-to-day lives. The Access to Cash Review report showed that there were large groups of consumers that, if we moved to a cashless society, would struggle to live their day-to-day lives in terms of payments. 

Just to ask the same question as I did earlier, would it not be the case that, if the digital infrastructure was there, if we had those provisions in place, that in, say, 10, 15, 20 years the innovation would be sufficient to allow for us to be in that cashless society, in that there wouldn't be anybody left behind? 

Yes. So, I think, as digital and creative, innovative ideas to help people make payments day-to-day develop over time, it's not unfeasible that we will get to a cashless society at some point, but I think it's important in the transition period that there is leadership from Government and regulators to ensure that the competitive market doesn't fail consumers. So, the ATM industry costs £1 billion every year. There are many fragmented organisations involved in that ecosystem, ranging from ATM operators, card issuers, large organisations that carry cash around the country, to people who service and maintain ATMs, and they all operate as commercial organisations in their own right and they make decisions for their organisations, not necessarily in the interests of good outcomes for consumers. And I think that's why, in a declining market of demand, there needs to be some leadership to ensure that that doesn't create bad outcomes for those who continue to need cash for the medium to long term.

So, what does that look like? Because that was my question, really. You're saying that no one organisation is responsible for ensuring cash access in a particular community. So, what would taking responsibility over ensuring that happens look like in your view?


So, I think that the Access to Cash Review recommendations were very welcome. I think what LINK is very supportive of is that all five of those recommendations are adopted. We are very pleased to see that the Treasury has announced the joint authorities cash strategy group committee, bringing together regulators to focus, basically, on an important issue—both the cash infrastructure and also the front-end in terms of how it's given to consumers. I think that is a very welcome step, and I think that that is the position. The JACS committee and Government now need to lead the industry to a place where those sorts of commitments can be given, because no individual organisation has the power or ability to do it on their own; there needs to be leadership from Government and from regulators in order for that to happen.

I know you'll get a question specifically on this, so I won't steal his thunder, but I just wanted to ask an additional question based on what you said earlier. You said that people can work with you on a voluntary basis. As part of any discussion ongoing, do you think that it should be voluntary—i.e. if there is a black hole in an area, if there's a vacuum, that those banks or those operations should be mandated to have a relationship with you so that there is always a LINK opportunity for them to access their cash?

So, LINK is the major domestic scheme in the UK for ATMs. We are a competitive scheme, so Visa and MasterCard also offer a network of ATMs, so we are not a monopoly scheme in that everybody participates within us. So, anything that we do in terms of that, we need to focus on the fact that it is a competitive market from an ATM scheme perspective, as well as those who participate within it. So, I think that's quite challenging from a LINK perspective, because it will put us at an advantage or disadvantage against other schemes that are competing against us in the UK.

You mentioned the joint authorities cash strategy group, which you called JACS. I don't think you should have any illusions that we are in any way insightful of what the UK Government is doing. So, can you just elaborate on what you expect that group to come out with? And are its recommendations likely to be taken seriously by the Government?

I think it's early days. It's our understanding that the JACS committee has formed and had its first meeting, and it's very recently, I think literally in the last week, published its terms of reference, which talk about its role and the role of bringing the regulators together to oversee this. I think the other important move that happened in the last few days is the announcement by UK Finance on behalf of the banks to work over the summer towards an access to cash guarantee or commitment for communities, which essentially tries to look at bringing access points for cash together into one place and to think about it holistically for the right outcomes for consumers, and LINK welcomes that. So, ATMs is the main point that consumers get their cash, but it's not the only one. So, branches, post offices, cashback all need to be thought about in the round.

So, your view is that the UK Government is taking this issue seriously and will be amenable to making changes as a result of the representations that are made.

The Treasury has obviously set up the committee. I think it's too early days to say whether it's successful or not because it's only been in operation for a short time. But LINK very much welcomes it, and we are optimistic that that will now take charge and lead us to a better outcome for consumers in the long term.

Okay. We'll keep an eye on that one.

With regard to broadband, you say that digital may help one day but it's not going to help everything today. Do you think that broadband will have a significant role in the future in helping access cash?

So, I think in terms of underpinning capability for digital payments—so, contactless, debit cards and any other form of payment that might be on your mobile or other form of technology—I think it's critical that, if we ever get to a cashless society, people need an alternative to cash and broadband access is a very important part of that working in a resilient way.

Thank you, Chair. Looking at the current position regarding access to ATMs in Wales, in your written evidence, LINK said that

'the provision of free ATMs across the UK including in Wales remains satisfactory.'

Could you expand on that for us, as to why you've reached that conclusion?


Yes. The number of ATMs in Wales at the moment is about 2,250. That's down about 10 per cent from the date of our announcement last year, but it is on a par with the level of provision that was around in 2015, when there was, basically, no issue and consumers could easily access cash. So, we believe that there is good coverage of free-to-use machines in Wales. Long-term decline in consumer demand obviously puts that under immense pressure. Because the way that the—. Perhaps it would be helpful for me to just describe how interchange works, because that essentially underpins the free-to-use network.

Interchange is a payment that's made by a card issuer to an ATM operator to enable a customer to use a machine free of charge. So, if I bank with Nationwide and I want to use a Lloyds machine, Nationwide will pay Lloyds Bank about 25p to enable me to do that free of charge. So, interchange basically underpins the entire system in the UK, and so transactions and demand is what makes machines viable, essentially. So, once we move to an environment where we're seeing 10 per cent reductions in demand year on year, it's going to become challenging to be able to maintain that footprint. 

So, the steps that LINK took at the beginning of last year were to essentially cut the level of interchange in busy city centres. So, 80 per cent of ATMs are within a few hundred metres of each other and it's clear overprovision, and a cost that is unsustainable in a declining market. So, we cut the rates in busy city centres and we applied large premiums to those in the most remote, rural and deprived locations in order to redress that balance, effectively, to make sure that any ATM that is free to use that doesn't have another one within a kilometre, is maintained in that community and that it doesn't go, essentially. So, that's the commitment that LINK made to maintaining what we believe is a good coverage of machines in the UK.

Okay. So, you've extrapolated more detail for us there, beyond those headlines, and particularly looking at rural areas. In their evidence to us, Which? said that they were concerned that the reduction of free-to-use ATMs was being driven by business interests without sufficient consideration being given to the needs of consumers and local communities. What would you say to that?

LINK doesn't own or operate machines and we can't mandate our members to install machines in locations or to maintain them, so it is a totally competitive market. Every individual LINK member can decide how many machines they have, where they put them and whether they charge or not. That's not anything that LINK has control over. What we do have control over are the incentives that are paid on a per-transaction basis, and our commitment is to coverage. So, if one member or one organisation with a commercial decision decides to leave that community, what LINK has committed to doing is either to applying premiums to get somebody to go back into that community, or in the event that those premiums and subsidies don't work, we will directly commission an ATM. But we are reliant on ATM operators physically installing, and we're also reliant on having a willing retailer. So, if there's no shop or premises with a willing retailer to house an ATM, then, again, that becomes quite challenging.

Okay, thank you. The 1 km radius policy that LINK follows, do you feel that that is sufficient, then, to protect the network of ATMs, particularly in a rural area?

We believe that our policy around 1 km machines is working today, so I don't think that there's an immediate issue that consumers need to be concerned about. But we are in a market of declining volumes, and with large fixed infrastructure costs, some action needs to be taken by Government to lead, because a fragmented and competitive marketplace will not work, necessarily, for the best outcome for consumers. So, I don't know if that answers your question or not, but—

And one final question, if I may. As Assembly Members, if we're contacted by communities, particularly rural communities where they haven't had banks for some time and haven't had an ATM, but now feel that they really need one in order to survive, would we be able to contact LINK to see if that is viable in conjunction with a local business? Is that the kind of facility that you'd be able to offer directly to communities, then—that kind of dialogue?

LINK would be happy to facilitate new site suggestions for ATMs with our members. What I would say, though, is that we really welcome the move by UK Finance to pull together an access-to-cash commitment, which looks far more broadly than just ATMs, and it will also consider how specific communities might have challenging or different circumstances, so where a kilometre is not a kilometre for some groups of individuals. We have the kilometre rule, but I think what is really helpful is that UK Finance are now starting to look at how we adapt a commitment that allows us to look at applying it flexibly in a small number of cases where that perhaps doesn't work.


Just going back to—. I know you were listening to the evidence earlier. I just wanted to understand, though, for me: what is your definition of 'urban areas'? You said, obviously, you've only had reductions 'in over-provisioned urban areas'. But, of course, as we will know as representatives, even within defined urban areas, there is rurality, and I wanted to understand, when there are reductions, that that those are in places where there would be three ATMs in a line, as opposed to—. Well, actually, even in Aberavon, up in the Valleys, they may lose out, because of that rurality aspect.

So, LINK monitors the network continuously, and each month we publish what's called a footprint report, which gives an update on what's going on with a network, the size of it, and what's happening with protected machines, which are these ones that are on their own or not within a kilometre. We monitor the number of ATMs that, essentially, have another one within a kilometre and there is clear provision there, where there are multiple options. If we find one that has lost its neighbour, whether it's urban or rural, or deprived or affluent, if it doesn't have another ATM within a kilometre, we will bring that into our programme and give subsidies to it with immediate effect, because it is the last ATM a community replies upon, whether it is rural or urban, essentially. Does that answer your question?

Yes, I was just trying to understand the contrast between what Which? was saying and what you were saying in terms of understanding where the closures were happening, where that was impacting on a community and how that was happening, so I think I understand it better now.

Do you have any further questions—? Do you want to come on to your section, Bethan?

Okay. My questions are on—well, you've covered it a bit, I think—the premiums, just whether you can say a little bit more about that and whether you think that's sufficient and whether you think there would need to be changes to that.

So, in January of last year, we announced a set of subsidies to give to protected machines, or machines in deprived locations that are, essentially, low volume. It's on a graded scale, and, essentially, one that does fairly low volumes of transactions, which clearly is not generating any form of interchange to cover its costs, would get much more sizeable subsidies of up to £3, whereas those that are transacting, but are perhaps not breaking even, would get slightly less. So, we're not paying profit away, we're simply trying to subsidise the cost of running that machine. Those larger subsidies were introduced from 1 April, and we are monitoring the network as to how that is going on an ongoing basis, and if LINK needs to take further steps in terms of other premiums or other measures, it will do so, within the scope of its powers, essentially.

Yes, because, obviously, we've heard from Which?, who's calling for the Payment Systems Regulator to conduct a review of the financial inclusion programme and the wider commitments. That's obviously motivated by what they're seeing happening not going far enough, and I appreciate you can only control so much, but what do you say to that call for action from Which??

We are regulated by the PSR. They hold us to account for our commitment to maintaining the level of coverage, and we report to them on a monthly basis on that. So, they are holding us to our commitment, essentially, and I think that as part of their work they review whether measures that we've put in place are sustainable and whether they are good enough, essentially—

So, you don't think that an extra inquiry into how you're doing this is needed, because, of course, they're saying that people in deprived areas or rural areas are still not getting enough out of the financial inclusion programme.

I think the financial inclusion programme has been very successful in the decade-plus years that it's existed. So, there have been 1,800-odd communities that have had a free ATM that never had it before, and so we've made giant strides in that, and made a real impact on consumers' day-to-day lives. 

I do think now, though, that now is the time to have a much broader review about access to cash, not just ATMs but post offices, cashback and branches, and that's why we welcome the work by JACS and also the work by UK Finance to think about a more holistic view. And I see the work that LINK does being part of that review, and forming part of the commitment going forward. 


So, you think all of this will be covered there, as opposed to, as I said earlier, any inquiry into that particular element? Do you think that the financial inclusion programme will be covered as part of this JACS committee that we need to find out more about?    

Yes. So, UK Finance are looking at an access-to-cash commitment. They haven't, obviously, published any detail, because they're going to spend the summer having a look at the situation. They're looking at a range of different channels where you get cash. They're looking at different ways that the market is innovating, looking at different options and, essentially, reviewing the cash infrastructure and how that works for consumers. So, we see that that commitment that they will develop over the course of the summer and publish in September will very much impact on the work that LINK does, both in remote and rural areas and also in deprived areas. 

And my final question, if I can. We visited Principality Building Society last week, and do you think one of the main motivations for the decrease in ATMs specifically is we were hearing that the banks feel that if they're getting rid of a building, the ATMs go as part of that, and then to replace it is very costly. What's your view on that? Because if you were going to be introducing another—. I know somebody else has got questions on the community bank, but if you were going to introduce something entirely new, could you give us an idea based on your experience of how much that would cost to create that ATM, even in a physical sense, and then the regulatory cost that that would incur? Is that something you would know? 

Yes, it's difficult to be specific. So, in the example you've given—. So, there are lots of different ranges of how you can deploy an ATM, from putting one in a convenience store that essentially requires no building work, no planning, no construction work or anything like that, right the way through to deploying one through the wall on a building that requires considerable cost and security measures, and other things, to be able to get it in. So, the range is very broad. 

I think the average within the industry is around £7,000 to £10,000—something along those sorts of lines—but that doesn't involve—. In the example you've given, which is making good and, essentially, putting an ATM into a building through the wall when a branch leaves, that could be several thousand pounds more. But I think in that scenario, what LINK will do is it will monitor to make sure that if that ATM and that bank that's gone is the last one in town, we will essentially take steps to make sure that we replace that for that community. That's our commitment. We have no control or influence over branch closures, and no control or influence over what that individual commercial organisation decides, but we have made a commitment to consumers to protect those communities where they're the last one within a kilometre.  

I noticed you were in the public gallery watching the previous evidence session. Is there anything with regard to the Post Office's evidence with regard to their infill role where banks leave—was there anything that jumped out at you that you'd like to comment on, because I saw you were watching that? 

Yes. I think my comment on the Post Office is less about perhaps the role that they play on broader services as part of a bank branch closure, because that's not really the sort of space that LINK sits within, but I would comment and say that I believe that the cash-over-the-counter service that the Post Office provides to consumers is very valuable. And I think that the Post Office does play a very valuable role in the community, and should be considered in the round with all the other mechanisms to access cash. Obviously, if we were to lose post offices on a large scale, that would be detrimental to consumers where they do give that service. 

And was there anything they said that you want to reflect on, or are you happy that their evidence stands alone? It's fine to say that if you think—

Nothing springs to mind, no. 

Okay. And in your written evidence you said that

'stronger overall coordination and closer cooperation between entities such as LINK and the Post Office is important.'

How does the relationship between LINK and the Post Office work, and how has it developed? 


There is no direct relationship between ourselves and the Post Office. They are not a member of LINK, and have never been a member of LINK. We have collaborated with the Post Office on a project to update the LINK app. So, LINK has an app, a free-to-use app, which, essentially, you can download and find your nearest free-to-use machine. So, there's no reason why somebody should use a pay-to-use because we put information at the fingertips of the consumers to find that. That app enables you to search for machines with different facilities like audio assistance for blind and partially sighted, or ones that dispense £5 notes, for example, and consumers have been using that app and it's been in existence since 2017. Recently, we've collaborated with the Post Office to put post office locations onto that app, to give a broader view as to where consumers can access cash. So, you'll now be able to see both, but that was an agreement between ourselves and the Post Office as the first formal thing we've worked on together. But there is no formal relationship between LINK and the Post Office. 

Thank you. Mary, you were in the gallery watching the previous session, and there were questions around Mark Drakeford, the First Minister's talk about bringing forward a community bank for Wales, which would offer a face-to-face service, physical buildings and the ability for customers to open current accounts. Have you got any views or thoughts on that?

LINK welcomes solutions that work for consumers. Whether that's a post office, a bank branch or a community bank, I think it's for the industry to decide. I think our view would be that, as part of that, it would be critical to have access to ATMs. That would be my only comment on that. 

Okay. I'm aware that you gave evidence to a committee of the Scottish Parliament, who are doing a similar piece of work to us on access to banking. As committee members, we're not aware of their work or outcomes. Is there anything that you can reflect on on the work that they've done?

I don't think there's anything specific that I would reflect on, but I would say that we really believe that now is the time for action from Government and regulators. That's why we welcome the Scottish Parliament and yourselves looking at these sorts of issues and bringing them to the fore, and igniting some energy and some action around change. I think all I'd say is that we welcome that intervention. 

I don't know if you're aware of the outcome of their work at all. Because it's not something we looked at as a committee. I don't want to put you on the spot, but—.

I think they're still yet to publish. That's my understanding. 

Right. Okay. And in terms of recommendations, we'll be producing our report and making recommendations to the Government. What's your view in terms of what we should be recommending to Government, specifically on what is within the remit of the Welsh Government? 

I think support for the moves that the industry has taken around trying to define an access to cash commitment and to implement that. I think if the Welsh Government were to support that, that would lend weight to the argument. I would recommend that the Welsh Government considers how Wales might benefit from an access to cash commitment, and perhaps how Wales might be slightly different than other countries in the UK, and to have a think about how that commitment works in the Welsh economy and for Welsh people. 

Okay. Do any Members have any further comments or questions at all? No. Is there anything else you would like to add, Mary?

Just to say thank you really. Thank you for the opportunity to come and give evidence. If there's any more detail or information that you would find helpful from LINK, we would be more than happy to submit that. 

We welcome that, and the same back; if you do hear the remaining evidence from other sessions, then please feel free to comment on those sessions as well. You'll get a copy of the transcript of proceedings afterwards, so please have a look at that as well and let us have any feedback if you want to add anything to what you said today. 

Can I thank you, Mary, very much? Thank you very much. 

Thank you. You're welcome.

5. Cynnig o dan Reol Sefydlog 17.42(vi) i benderfynu gwahardd y cyhoedd o'r cyfarfod
5. Motion under Standing Order 17.42 (vi) to resolve to exclude the public


bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod, ac eitem 1 o'r cyfarfod ar 19 Mehefin, yn unol â Rheol Sefydlog 17.42(vi).


that the committee resolves to exclude the public from the remainder of the meeting, and item 1 of the meeting on 19 June, in accordance with Standing Order 17.42(vi).

Cynigiwyd y cynnig.

Motion moved.

I do move to item 5, and I propose under Standing Order 17.42 to resolve to exclude members of the public for item 6, and also for the first item of next week's meeting as well. Are Members content with that? Thank you. In that case, that draws our meeting to an end. 

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 11:24.

Motion agreed.

The public part of the meeting ended at 11:24.