Cash machine group pays for charging

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The Independent Online

The Treasury Select Committee's inquiry into cash machine charges took its first corporate casualty yesterday. Scott Tod, one of the growing number of fee-charging cash-dispenser operators, warned the run of bad publicity caused by the investigation is set to reduce its profits "substantially" in the coming months.

The Treasury Select Committee's inquiry into cash machine charges took its first corporate casualty yesterday. Scott Tod, one of the growing number of fee-charging cash-dispenser operators, warned the run of bad publicity caused by the investigation is set to reduce its profits "substantially" in the coming months.

In an unscheduled trading statement, the group said that while profits for the first half of its financial year will be broadly in line with expectations, an increase in expansion costs and a fall in the number of people using its machines would lead to a much poorer second half.

The news - the first blip after a year of exponential growth in the sector - wiped more than 25 per cent off Scott Tod's market value yesterday, as its shares slumped to a 12-month low.

The company said: "The rapid growth in the orders for [cash machines] has resulted in a substantial increase in running costs associated with the orders, installation and related costs. But the trend of transaction revenues in December, which were below expectations, suggests that transactions across the Link network have been affected by adverse publicity surrounding charges by cash machines. It will take longer for the increased [cash machine] estate revenues to grow than previously anticipated."

The statement contradicts directly last week's update from Cardpoint, a rival cash machine operator, which claimed that the adverse publicity had actually helped make people "more aware" of its machines.

The Treasury Select Committee, chaired by the Labour MP John McFall, launched its inquiry into cash machine charges last November after research from the building society Nationwide revealed fee-charging machines now account for 40 per cent of the UK's 50,000 cash dispensers.

Having interviewed the consumer body Which? and the network provider Link last month, the inquiry restarts on Tuesday, when James Crosby, the chief executive of HBOS, and Benny Higgins, the head of Royal Bank of Scotland's retail banking division, face the committee. A handful of private cash machine operators are also due to be questioned then.

Last summer, HBOS sold more than 800 machines to Cardpoint, of which about one-third have been converted to full fee-paying terminals - a move criticised by consumer groups.

Nationwide, which has led the campaign to prevent the death of free-to-use cash dispensers, made new calls yesterday for a cash machine code of practice to be implemented in the UK.

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