Charging ATMs and the case for remote control

Sam Dunn asks if the reform calls of MPs will restore free money for poorer families in cashpoint deserts

The Post Office was in the doghouse, fears abounded of poor communities paying over the odds for cash and vociferous demands were made for banks to act more responsibly.

The Post Office was in the doghouse, fears abounded of poor communities paying over the odds for cash and vociferous demands were made for banks to act more responsibly.

It was business as usual last week for the Treasury Select Committee - a body that has become a persistent attack dog for consumers against the financial services industry - as it tore into the UK's network of charging cash machines.

Reporting back after its inquiry into the explosive growth of cashpoints that charge up to £1.75 for a withdrawal, it stressed all consumers had a right to "good access" to free ATMs.

Poorer families who take out small sums often would suffer in particular if the growth of charging ATMs - currently accounting for some 40 per cent of the UK's 53,000 total - continued unchecked, said John Mc- Fall, chairman of the committee and Labour MP for Dumbarton.

The issue of those on low incomes getting access to free cash should now be looked at as part of the Government's Financial Inclusion Task Force, said the committee's report.

Britons were charged £140m to withdraw money from charging machines last year, although just 3.7 per cent of all ATM transactions take place at these cashpoints, which are often found in rural or inner-city areas.

Mr McFall added that banks needed to "think carefully" before selling off free machines - a trend likely to continue in remote regions - and that poor fee-warning signs on charging ATMs meant many operators were "not being straight and fair".

With three-quarters of its branch ATMs levying a fee, the Post Office came in for censure. The report called on the Government to find out if it was ever envisaged that 75 per cent of the network's cash machines would charge up to £1.50.

The Post Office had a "unique opportunity" to tackle financial exclusion in communities, it said, and so should "fundamentally re-examine its policy".

Now that benefits are paid direct into bank accounts, there are concerns that the vulnerable will be hit hardest by a lack of free ATMs. At the moment, independent operators that install charging machines are able to dictate the terms of a contract with post offices and sub-post offices.

This does "not provide [a] result in the best interests of the local community", the report said, adding that customers in post offices were being charged £10m a year to withdraw cash.

The report also pointed to a lack of transparency. New rules already agreed in the industry for bigger and clearer warning signs on charging ATMs come into force on 1 July, but these are unlikely to be enough, the committee warned.

It wants each machine to inform users of the amount they will be charged, and the on-screen fee warning to be written in a larger size.

Other requests made by the committee included a call for independent operators such as Cardpoint and Bank Machine to join the Banking Code and to abide by its voluntary "good practice" guidelines, which aim to protect the consumer.

It also asked the Office of Fair Trading to conduct research into the geographical distribution of cash machines, and the Banking Code Standards Board to develop "alert" proposals for ATMs so people know when the last free cashpoint in a certain area is about to be closed down.

Consumer groups broadly welcomed the report and Stuart Bernau, director of Nationwide building society, called it "the last chance to protect free cash machines in the UK".

A spokesman for the Post Office reiterated that its policy of well-signposted charging ATMs was clear to customers, and that it made no profit from the machines. Free cash via its counter service for bank customers meant that millions of low-income customers could get free access to their money, he said.

Despite the committee's calls, it has no powers to enforce its recommendations.

The Government must now draw up its official response, and this is expected by June, although an election might hold the process up. When it does report back, that will probably prompt a renewed debate in the House of Commons.