Session 2004-05 no. 17, 31 March 2005
FREE WITHDRAWAL OF CASH MUST BE PROTECTED
Consumers are being charged £140 million a year to access their own money at ATMs.
A report by the Treasury Select Committee concluded that large visible signs should be placed on charging machines to warn consumers of the added cost.
MPs expressed serious concerns about the trend towards replacing free cash machines with ones that charge.
They concluded that if the trend continued, some communities may lose out on free access to cash altogether.
MPs also noted that people on low incomes could suffer as a result of fee charging machines. This is because they are more likely to withdraw smaller amounts, more frequently and therefore incur more charges.
They recommended the Post Office urgently re-examines its policy toward charging ATMs, and gives more thought to the needs of the local community before introducing ones that charge.
Commenting on the Report, Chairman John McFall said:
"Good access to non-charging machines should be available to all consumers. It's unfair that some people may be forced into paying £1.50 every time they make a withdrawal.
Banks need to ensure that their commitment to free machines extends beyond their branch network. They should think carefully about the effect of their policies when closing or selling free machines that would deprive communities of free access to cash withdrawal.
Better signs should be introduced so that people are aware they're being charged. Currently, many charging machine operators are not being straight and fair with consumers. They must act in a responsible way to ensure customers can make an informed choice about which cash machines to use.
We are already paying £140m a year to access our own money. This is a very worrying trend and one that should be monitored closely. It would be wrong if every withdrawal was to hit consumers in their pocket."
The Committee examined four main areas:
1. Increasing prevalence of charging machines
Some of the growth has come from fee charging machines being installed in locations where there were previously no bank-operated ATMs. However, in a number of cases free machines are being replaced with charging ATMs.
Banks such as HBOS and Abbey have sold some of their non-branch ATMs to fee-charging providers. All witnesses agreed that more machines will be converted from free to charging. The Committee concluded that there will be important public policy concerns if, away from existing bank branches, free access to cash withdrawal declines.
Evidence to the Committee showed that warning stickers are often hidden away and on-screen alerts can occur just prior to when the user withdraws cash, rather than at the start of the process. Charging machines also prominently advertise the ability to make 'FREE balance enquiries' in an attempt to mislead consumers.
The Committee concluded that poor standards of transparency are detrimental to consumers and hinder competition. Whilst LINK are introducing new arrangements from July 2005, MPs do not believe these go far enough. Machines should have prominent warnings of the amount of the charge written in large, easily read fonts.
3. Financial Exclusion and the Post Office
75% of cash machines in Post Offices charge. Currently, consumers pay £10 million a year to withdraw money from these machines.
The system of Direct Payment of benefits into bank accounts will increase the number of benefit recipients that use ATMs to access their cash.
However, currently Sub-postmasters have no control over what type of machine they install, and no account is taken of the needs of the local community.
MPs believe the Post Office has a responsibility to move towards greater provision of free machines, particularly when there are no banks nearby.
The present LINK approach to enforcement is inadequate and MPs saw evidence that some charging cash machines were flouting the rules. The Banking Code should be extended before the end of the year to cover all charging cash machine operators and to incorporate LINK transparency rules.
Notes for Editors:
1. Embargoed hard copies of the report will be available from the House of Commons Press Gallery and the Reception 7 Millbank from 1130hrs on Wednesday 30th March.
2. Media Bids/Request for interviews with the Chairman should initially be directed to Luke Robinson on 07834 312705. The Chairman can be contacted on 07730 987802.
3. For detailed information the Treasury Committee can be contacted on 020 7219 5769; John McFall MP's office is available on 020 7219 3521.
6.Committee membership is as follows: John McFall MP (Chairman), Nigel Beard MP, Jim Cousins MP, Angela Eagle MP, Michael Fallon MP, David Heathcoat Amory MP, Norman Lamb MP, John Mann MP, George Mudie MP, James Plaskitt MP, Robert Walter MP.
7. The report's title is Cash Machine Charges and will be published as the Committee's Fifth Report, Session 2004-2005 (HC 191). The report will be available on the Committee's website from 1530 on Thursday 31st March.
Luke Robinson, Select Committee Media Officer
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