Banks prepare for Correios confrontation over cash access fee | Business News

Britain’s biggest banks are preparing for negotiations with the Post Office over a new deal that will allow millions of their customers to withdraw money at their branches.

Sky News has learned that a group of creditors, including Barclays and HSBC, are in the process of forming a common interest group to represent the industry in negotiations with the state-owned company over the coming months.

The negotiations will aim to draft a new Banking Framework Agreement, the latest iteration of which will expire at the end of next year.

Around 30 banks and building societies participate in the existing arrangement, paying in total approximately £200 million annually to facilitate customer access to the Post Office’s 11,500 branches.

The service is particularly valuable for those who still rely on physical cash after a nine-year period in which almost 6,000 bank branches were closed across Britain.

Banking industry sources say they anticipate a demand from the financially strapped Post Office to increase the fee it charges for using its websites, with some speculating that it hopes it can raise up to £400 million a year.

If such a demand comes to fruition, they added, the industry is expected to resist it vigorously, based on data showing that use of the service by bank customers has remained practically stable.

In 2023, more than £10 billion of cash was withdrawn over the counter and £29 billion of cash was deposited over the counter, the Post Office said.

Negotiations on a new agreement with banks will begin at a critical time for Correios, which has been plagued by scandals.

Dependent on an annual government subsidy, the network’s reputation was damaged by the Horizon IT scandal and the wrongful conviction of hundreds of sub-postmasters.

A Post Office spokesperson said: “Our partnership with 30 banks and building societies ensures no one who relies on cash is left behind, which is made possible by our postmasters in almost every community across the country.

“This is even more important following the introduction of access to cash legislation and further highlights the critical role that postmasters play today and in the future in supporting customers in accessing their cash.

“We do not comment on ongoing commercial negotiations.”

UK Finance, the banking sector lobbying organization that is coordinating the establishment of the common interest group, declined to comment.