Access to Cash Bill may damage competition in banking sector, BPFI warns

February 29, 2024

The organisation representing the banking sector has warned that certain provisions contained in draft legislation aimed at ensuring continued availability of cash services pose a very real risk to the present and future competitiveness of the Irish retail banking sector.

The Banking and Payments Federation Ireland (BPFI) also stated that the Access to Cash Bill as currently drafted is neither fair nor equitable.

“Under the proposed provisions, it is the three retail banks or the three pillar banks that will have sole and legal responsibility for maintaining the prescribed levels of access to both ATM and cash access points or indeed counter services,” claimed BPFI chief executive, Brian Hayes, as he made his opening statement to the Joint Oireachtas Committee on Finance, Public Expenditure and Reform and Taoiseach.

“This is despite the fact they only control around one third of the general infrastructure.”

“All other providers who make up the remaining cash access infrastructure, including An Post, Independent ATM providers and Credit Unions, are excluded.”

Mr Hayes added that in a scenario where any one of these providers withdraws an ATM or counter service, leading to a breach of the cash access criteria, under the current proposals the retail banks will have to replace this service, even in circumstances where this is not commercially viable.

“Enacting the legislation in this manner unquestionably places the retail banks at a competitive disadvantage by creating an unlevel playing field amongst existing and perhaps even future market participants,” he said.

“Additionally, it will almost certainly lead to an increase in new and unquantifiable fixed costs for retail banks which could ultimately increase the cost of everyday banking services.”

“In the current environment, where our banks are once again profitable this may be sustainable, but given the cyclical nature of the sector and the business underlying the sector, such costs could pose challenges into the future.”

Mr Hayes also warned that the current provisions raise the very real risk of creating a significant barrier to entry for new retail banks into the Irish market because of the costs involved.

The BPFI is seeking changes to the proposed legislation, including widening the list of the “designated entities” who will be responsible for providing cash beyond just retail banks.

It also wants the provision requiring banks to be responsible for ensuring 99% of the population are no further than 10km away from a cash service point where money can be deposited or withdrawn with in-person assistance available to be revised to 15km, in line with An Post’s geographical commitments.

Without the change, Mr Hayes warned, it has the potential of imposing unquantifiable costs on the banks.

The federation also wants the responsibility to vary access to cash criteria to sit with the Central Bank, rather than the Minister for Finance at the time as currently envisaged in the draft rules, in order to ensure independence.

The BPFI is also seeking significant amendments to the triggers which will prompt a review of the access the cash criteria, including reducing the timeframe to every 30 months.

It also wants the definition of access to cash points to include cashback services, as well as branches, branch and independent ATM’s, An Post locations and credit unions.

Mr Hayes said the banking industry is committed to playing its part in maintaining access to cash as well as being responsible in managing its decline.

But he also told TDs and Senators that the responsibility must be “shared across all relevant market players working within realistic, responsive and objectively measured parameters.”

“The proposals, as currently presented, are of concern as they exclude key organisations from this remit, raise concerns in terms of the impact on competition, and have a genuine cost impact that is not currently quantifiable, with the knock-on potential that banking in Ireland may be more expensive in the future,” he said.

Responding to the BPFI, Sinn Féin TD, Rose Conway Walsh, said it had so many objections that it seemed if they were all taken account of it would change the whole purpose of the legislation.

Mr Hayes said it was not a case that the BPFI is against cash, but more it is about a managed decline of the service.

“Cash is here to stay,” he said.

Earlier, Assistant Secretary in the Banking and Financial Stability Division at the Department of Finance, Oliver Gilvarry, told the committee that while the trend towards cashless is strong, the retail banking review highlighted that cash is still important in the economy.

He added that it is particularly important to those on fixed and lower incomes as it allows people to control their finances.

Mr Gilvarry said that in light of this there is a need to ensure that cash remains available and accessible and as a result the review recommended legislation.

He said the purpose of the new rules is to ensure that any evolution is managed in a fair and equitable manner.

Article Source – Access to Cash Bill may damage competition in banking sector, BPFI warns – RTE

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