Cash machine charges hit poor, say MPs

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The Independent Online

Banks and private cash machine operators came under fire from an influential committee of MPs yesterday for penalising poor people with excessive charges for withdrawing money.

Angela Eagle, a Labour MP on the Treasury Select Committee, said: "Quite a lot of the charging cash machines are in the most deprived areas in the country. Profits are being made out of people that can least afford to pay charges in conditions where they have little choice."

She said people in deprived areas should have access to free automated teller machines (ATMs) and that fees at charging cashpoints, fixed at £1.50 or £1.75 in most cases, should be proportionate to the amount withdrawn.

People on low incomes tend to make more and smaller withdrawals and often end up paying between 10 and 15 per cent in charges each time, Ms Eagle added.

While the banks run free ATMs, there are almost 20,000 fee-charging machines owned by private operators, comprising 40 per cent of the network. Their number is growing rapidly in "convenient" locations such as shops and petrol stations and is set to rise even further if more banks follow HBOS's example and sell off their non-branch estates which are expensive to run.

In May HBOS sold 816 ATMs - 80 per cent of its non-branch network - to Cardpoint.

The consumer organisations Citizens Advice, the National Consumer Council and Which? told the committee that charges for using cash machines are excessive, unfair and worryingly on the increase.

The committee heard about Speke, a deprived area in Liverpool where three-quarters of people rely on state benefits.

Jenny Hickson, an adviser from the Citizens Advice Bureau in Speke, said there was only one bank branch, which was small and rarely open for business, so people had little choice but to use one of the two fee-charging cash machines in the area - one in a supermarket, the other (run by Hanco, which is owned by Royal Bank of Scotland) in the local post office. She said: "You have to drive out of Speke to access banking services. There is just no choice for them but to pay that charge."

It was estimated that the 10,000 people in Speke who are on benefits and typically withdraw cash about twice a week pay a staggering £2.3m a year to access their own cash.

While 97 per cent of all cash machine transactions are free, Nationwide Building Society estimates that the revenue from charges has more than doubled in the past year to £140m from £60m.

MPs on the Treasury Committee also attacked Link, the cash-machine network set up by the banks, for not labelling charging cashpoints as such. John McFall, the committee chairman, called for clearly displayed signs that alert customers from afar.

Reacting to the committee's inquiry, Barclays said all of its 3,800 ATMs were free of charge and added it had no plans to sell any to private providers.