We are conducting our second annual review of Specific Direction 12 (SD12). SD12 is designed to ensure that LINK:
- maintains a broad geographic spread of the UK’s free-to-use (FTU) cash machine network
- meets service-user needs by having in place and maintaining appropriate and effective policies and measures
We would like to hear your views on how well SD12 is working in practice and on its role following the changes introduced by the Financial Services and Markets Act 2023 (FSMA 2023).
Why we are publishing this call for views
We issued SD12 to LINK in March 2022. It will be in force until 2 January 2025, unless we vary or revoke it. We said we would review SD12 after 12 months and 24 months. We published the findings of our first review in July 2023. We are now conducting our second review.
Background
Specific Direction 12
SD12 superseded Specific Direction 8 (SD8) and Specific Direction 8a (SD8a), which required LINK to maintain a broad geographic spread of FTU ATMs in the UK and meet service users’ needs. SD8 came into force in October 2018 and was due to remain in place until January 2022. In December 2021 we issued SD8a, extending the duration of SD8 to March 2022, when we issued SD12.
SD12 requires LINK to monitor a number of metrics on FTU ATM coverage and report to us monthly. It must publish any such information as long as it is not confidential or sensitive. You can find LINK’s monthly Footprint Report published here, along with additional documents and policies, including LINK’s Protected ATM policy.
LINK must also provide us with an annual report on the resilience of its ATM Replacement Procedure. Access last year’s report here.
SD12 also states that LINK must have in place and maintain appropriate policies and measures so that it can continue to maintain the broad geographic spread of the FTU ATM network, and meet service-user needs. This includes policies and processes to maintain, install or replace protected FTU ATMs, including the Direct Commissioning process and financial incentives for operators.
First review of SD12
Our first annual review of SD12 concluded that it was working well and should remain in place. Nevertheless, we identified four areas for improvement for LINK to consider:
- Applying the Defined Radius approach in practice, including how best to take into account economic activity.
- Increasing the visibility and the level of detail of LINK’s published data on Protected ATM coverage, including decision-making on ATM replacement and updates to the Protected ATM list.
- The transparency of LINK’s decision-making on setting interchange fees.
- Improvements to LINK’s ATM Replacement Procedure (for example, reviews of protected status, reinstatement of Low Volume and Protected ATM premiums at closing sites, and Post Office opening times).
Current access to cash coverage
Our latest estimates, as of Q1 2023, suggest that 95.1% of the UK population are within one mile of a free-to-use cash withdrawal point, such as a cash machine or a Post Office branch. 99.7% of the UK population are within three miles.
The number of FTU ATMs declined by 2,130 (5.4%) between 2022 and 2023. LINK’s January 2024 Footprint Report states that there is a total of 3,482 Protected ATMs in the UK, with 245 newly defined as Protected. This represents a 7.6% net increase compared to the figure for March 2022 when we introduced SD12.
Legislative changes due to FSMA 2023
Since the publication of our first review, the Financial Services and Markets Act 2023 (FSMA 2023) has introduced legislative changes confirming the FCA’s lead role in access to cash regulation.
The FCA ran a consultation on its proposed regulatory framework between December 2023 and February 2024, setting out its proposed rules. We will continue to work closely with the FCA to ensure consistency between its final rules and our future role as the regulator of LINK.
We will help ensure that cash infrastructure continues to be accessible and meet people’s needs, as one of a range of effective payment options. To achieve this the system must be robust, resilient and cost-effective. Therefore, we want to use our second review of SD12 to consider its role in the context of the changes to the regulatory landscape.
Our approach to supervision
We will soon publish a document setting out our proposed approach to supervision, which will also be subject to a call for views. We think that our proposed approach would improve the way we manage ongoing relationships with payment system operators, including LINK, but it would not automatically alter any existing requirement we have placed on firms.
In the meantime, the scope of this current call for views does not include our broader relationship with LINK.
The scope of this call for views
We invite you to submit your views on four areas, focused on the operation of SD12:
- How effective SD12 has been in delivering its purpose – i.e. requiring LINK to maintain a broad geographic spread of FTU ATMs and meet service-user needs.
- How well the requirements under SD12 have worked in practice in relation to maintaining and replacing protected ATMs, as defined in paragraph 3.7 of SD12.
- How successful LINK has been in addressing the areas for improvement identified in the first annual review of SD12.
- The role of SD12 in the regulatory landscape introduced by FSMA 2023.
We welcome all responses, at whatever level of detail you feel is most appropriate.
Who can answer this call for views?
This document will be of particular relevance to ATM operators, consumer groups and merchants, as well as anyone with an interest in the provision of access to cash.
How to respond
This call for views is open until 5pm on Thursday 2 May 2024. You can submit your responses by email to psrsd12responses@psr.org.uk or write to us at the following address:
ATM Network Regulation and Digital Payments Payment Systems Regulator
12 Endeavour Square
London E20 1JN
Will my response be published?
We plan to publish non-confidential responses alongside our final report. We will handle any confidential information we receive from this call for reviews in accordance with our Powers and Procedures Guidance. Please clearly identify any parts of your response that you consider to be confidential.
Next steps
Once the call for views closes, we will consider all the responses we receive to inform our assessment. We will publish a report summarising comments and setting out our findings later in 2024.