Free cash machines for poor areas

More than four in 10 cash machines charge a fee

Up to 600 free-to-use cash machines are going to be placed in low income areas of the country, it has been announced.

The pledge by the UK's biggest banks follows an investigation by the parliamentary Treasury Select Committee into the spread of charging machines.

Just under half of the UK's 58,000 cash machines charge an average of £1.50 for a withdrawal.

Citizens Advice hailed the pledge to install more free machines as "great news for the poorest people".

Fears

There had been fears, expressed by witnesses appearing in front of the committee, that the spread of charging cash machines was disproportionately hurting the poor.

The argument went that banks and building societies were closing branches in areas with less affluent populations.

Yet it was these areas which were most often the sites for new fee-charging machines, usually installed at post offices, newsagents and petrol stations.

Not having free access to money hits poorer people hard, forcing them to travel miles to the nearest free machine or to pay to access their money Teresa Perchard, Citizens Advice

The rate of spread of charging cash machines has been phenomenal in recent years.

Six years ago there were only a handful of charging machines.

But by 2005 the number of fee charging machines had mushroomed to 25,000. This compares to 33,000 free-to-use machines.

'Step forward'

The new agreement means banks and building societies will pay a premium to independent cash machine operators to set up and maintain the new network of 600 free machines.

John McFall MP, chairman of the committee, said that boosting the number of free machines was a "huge step forward in our campaign for financial inclusion".

"The financial inclusion premium is the first example of such an innovative approach anywhere in the world," he said.

"It will use market forces that already shape the deployment of free cash machines to achieve and sustain an important public policy objective."

Many of the sites for the cash machines are yet to be decided.

In addition, Mr McFall said that charging cash machines providers had agreed to improve warning signs.

The new larger signs will be "crystal clear", leaving people in no doubt that using the cash machine entails a charge.

In response, Citizens Advice welcomed the prospect of improved signage and more free cash machines.

"Not having free access to money hits poorer people hard, forcing them to travel miles to the nearest free machine or to pay to access their money," said Teresa Perchard, Citizens Advice director of policy.

"The process must be speeded up so that thousands more people can benefit.

"Introducing standardised and clear information on machines that do charge fees is very good... Customers must know exactly how much they are paying when taking out money."