Banks to be fined if they fail to provide free cash machines that actually work

Free cash machines should be no more than one mile away in cities or three miles away in rural areas, under the new government measures

Free cash deposit and withdrawal points must be no more than one mile away for people living in urban areas, rising to three miles in rural areas, under the plans ((iStock/PA))

Banks could be fined if they fail to provide the public with free cash withdrawals under new powers set out by the Treasury.

The new government measures will state that free cash deposit and withdrawal points must be no more than one mile away for people living in urban areas, rising to three miles in rural areas.

It makes clear that the Financial Conduct Authority (FCA) should use its powers to maintain this level of coverage, while recognising that needs may change over time.

Banks and building socities which fail to provide free, working cash machines could be fined by the financial services watchdog.

Treasury Economic Secretary Andrew Griffith said cash had "an important and continuing role to play" despite the shift away from reliance on coins and notes.

It comes amid concerns of ‘cash deserts’ but is unlikely to halt branch closures overall in the ongoing shift towards a cashless society.

Mr Griffith said: “People shouldn’t have to trek for hours to withdraw a tenner to put in someone’s birthday card - nor should businesses have to travel large distances to deposit cash takings.

“These are measures which benefit everyone who uses cash but particularly those living in rural areas, the elderly and those with disabilities.”

Treasury Economic Secretary Andrew Griffith said cash had "an important and continuing role to play" despite the shift away from reliance on coins and notes ((Alamy/PA))

The new policy also makes clear that if a cashpoint or other facility is removed, a replacement should be provided in advance so people can still access their money.

Under the plans, the FCA will have the power to protect the provision of cash access services, including without fees for those who hold personal current accounts.

John Howells, chief executive officer of cashpoint network Link, welcomed the Government's statement.

He said: "Alongside Link's existing commitments that mean that every high street gets free access to cash, it will mean consumers and businesses will be able to withdraw and deposit cash in major towns.

"The UK is not ready to become a cashless society, so it's good to see these rules become law."