MPs say they could intervene if banks fail to resolve a dispute that threatens millions of customers with being charged to withdraw their own money from thousands of cash machines that at present are free to use.
Andrew Tyrie, chairman of the Treasury select committee, said that the impact on bank customers, in particular poorer ones, would be “considerable” if the 39 members of the Link network were unable to reach an agreement this week on how to share the cost of running the country’s cash machines.
Link members, including the big high street banks, are due to meet in London on Thursday to argue over the £900 million a year it costs to operate the UK’s free-to-use network of 70,000 cash machines. There are suggestions that some lenders could end the system, with the result that as many as a quarter of ATMs could soon charge customers as much as £2.50 to withdraw their money.
“Were widespread charging to return, the Treasury committee would almost certainly want to investigate. The public detriment — especially for the least well-off — could be considerable,” Mr Tyrie said.
“I will be writing to Hannah Nixon, managing director of the Payment Systems Regulator, to ensure that it is aware of the depth of public concern. Safeguards are needed to ensure that the most vulnerable customers, particularly those in rural areas and poorer urban neighbourhoods, are not disproportionately affected.”
Last week, Link said that its “commercial model” was under review and that the not-for-profit operator was hoping the argument about its future could be resolved within the next couple of months.
At present, operators of cash machines receive a fee whenever a customer of a rival bank uses their ATM. These interchange fees are supposed to compensate banks and other operators of ATMs for the cost of maintaining and supplying their networks.
However, with bank margins under pressure as historically low interest rates hold profit margins down, some lenders are looking to renegotiate and want more money for allowing people who are not their customers to use their cash machines.
On top of this, the acceleration in bank branch closures has pushed the issue of ATM charges up the political agenda. Last week, Clydesdale and Yorkshire Banks announced that 79 branches would be shut, adding to the closures already under way as the main high street banks pare back their nationwide networks.
In a radio interview last week, Paul McNamara, chief executive of NoteMachine, which operates 8,700 cash machines in the UK, said that the proposals being discussed by Link could mean about a quarter of all free-to-use ATMs being lost.
The dispute has echos of the battle in the late 1990s over cash machine surcharges, which effectively ended in 1999 when Barclays backed down from a threat to impose a £1 charge on all withdrawals from its ATMs.
An investigation by the Treasury committee would not be the first time that MPs have looked at the issue of ATM charges. In 2005, the select committee published a report on the issue, concluding that vulnerable customers “should not be subject to disproportionate costs as a result of ATM charges”.
The report concluded that the government should monitor the provision of free-to-use ATMs and be prepared to step in should it become concerned about financial exclusion.
Mr Tyrie’s intervention puts the pressure on Link and its members to end the dispute quickly to avoid a new high-profile investigation in which senior executives probably would be called to give public evidence to MPs.