Banks face fines if they fail to provide free access to cash withdrawals for consumers and businesses, the Treasury has confirmed.

A new policy will state that free cash withdrawals and deposits must be available within one mile for people living in urban areas.

In rural areas, where there are concerns over “cash deserts”, the maximum distance is three miles.

The move is unlikely to halt branch closures and the decline in cash use.

The Treasury said the distances were chosen to maintain the current level of coverage of free access to cash, through ATMs or face-to-face services. Those limits could be extended if cash use declines in the future.

Under the new guidance, if a service such as an ATM or branch is withdrawn and a replacement service is needed in the area, then this should be done before the closure takes place.

A voluntary arrangement is currently in place which means every High Street should have free access to cash within 1km. The detail of the new policy will come under the microscope, including the starting point and practicalities of the distances that have been stipulated.

UK financial news. ONLYWAY.NEWS