Date issued: 10 Feb 2005

NATIONWIDE WARNS MPS OF THREAT TO FREE CASH MACHINE NETWORK
The Society reiterates its call for fairness and transparency

Nationwide, which has been campaigning for five years to keep cash machines free, today revealed that it had been approached by a charging machine operator seeking to buy its remote ATMs. The revelation underlines the threat to the UK’s free ATM network. It also illustrates the need for fairness and transparency at charging machines in order to enable consumers to make a clear and informed choice.

At the Treasury Select Committee hearing into fee-charging cash machines, Nationwide’s executive director, Stuart Bernau:

• stated that growth in free ATMs is at a virtual standstill and that even this figure hides a worrying trend. In fact, the number of free remote (non-branch) machines actually fell in 2004*. The overall number of free machines has only been maintained because the number of free branch based machines has risen – a consequence of branch automation. Consequently, the geographical coverage provided by free machines has fallen.
• challenged views put forward at last week’s hearing that the proportion of charged transactions will remain low at around 5%. In the US, where 20 years ago most ATM were free, 95% of machines now charge and 40% of transactions are charged. If this pattern was repeated in the UK, consumers would pay hundreds of millions each year to access their own money.
• welcomed the improvements to transparency* that will take effect from 1 July but called for clarity and transparency to be further improved for consumers. The adoption of Nationwide’s proposed Code of Practice (see notes to editors) would mean improvements such as:
• more prominent warnings of charges
• all non-financial transactions remaining free
• a clear and prominent warning at least 30 days in advance where a machine which was previously free is to be replaced by a charging machine
• a clear and prominent warning at least 30 days in advance where a charge is to be increased.
• said that Nationwide would support ATM transactions being covered by the Banking Code. This would result in the LINK customer proposition being independently reviewed and would result in a more open process.

After speaking to the committee, Stuart Bernau, Nationwide’s Executive Director, commented: “The Treasury Select Committee’s enquiry has shed much-needed light on the whole issue of fee-charging cash machines. It is in the interests of consumers that charges should be fair and transparent and this enquiry has already had some impact on ensuring there is greater transparency. We look forward to the committee’s report as we strongly believe that more remains to be done to safeguard the UK’s network of free cash machines and to ensure consumers can make an informed choice.

“The suggestion that only 5% of cash machine transactions will ever incur a fee is a misconception. Experience from the US illustrates that it could go much higher. The rising number of charging machines has serious social consequences and we don’t want consumers to look back in five years and say ‘remember when access to cash was free?’”

* - year to October
** - improvements include displaying the amount to be charge up front in a minimum 14 point font size

Media information:

Rosemary Callender: Tel 07770 634531
Frank Creighton: Tel 07740 029083
Charlotte Sjoberg: Tel 01793 655189

Notes to editors:

Nationwide’s proposed code of practice for the industry:

• Machines must display a clear and prominent warning of charges before a card is inserted (either by a notice on the machine or an up-front screen message)
• Warnings should be as prominent as any signs promoting free services, such as free balance enquiries
• Display a clear and prominent warning of the charge on any other signage (for example, advertisements in shop windows)
• Place a £1.50 cap on charges - to be index linked
• All non-financial transactions should remain free
• Display a clear and prominent warning at least 30 days in advance where a machine which was previously free is to be replaced by a charging machine
• Display a clear and prominent warning at least 30 days in advance where a charge is to be increased

Case studies:

Should you want to talk to consumers who dislike being charged for withdrawing their own money, please contact the press office.

ATM Research

Nationwide Building Society’s research conducted last year shows:

People across the country said that it is not acceptable to be charged for withdrawing their own money from cash machines.

Percentage of people opposed to charges:

• UK 89%
• Scotland and Northern Ireland 94%
• Yorkshire and Humberside 92%
• Northwest 91%
• London 90%
• Southeast 89%
• East and West Midlands 86%
• Southwest 83%

The vast majority of people in every region think that the visibility of early warning signs should be improved:

• Northwest 98%
• London 97%
• East and West Midlands 97%
• Yorkshire and Humberside 97%
• Southeast 97%
• Southwest 96%
• Scotland and Northern Ireland 94%

Since April 2004, cash machine operators have had a duty to forewarn consumers if their machine will charge. The percentage of people who used a fee-charging machine between April and June 2004, but didn’t realise it charges until it was too late:

• In Scotland and Northern Ireland 16% had used a fee-charging machine. Of these 11% didn’t realise they would be charged for making a withdrawal.
• Of those questioned in the Northwest, one in five (18%) used a machine that charged. Of these one fifth (18.5%) didn’t know they would be charged.
• Those in Yorkshire and Humberside have used fee-charging machines least with only 14% of those questioned having used one over a two month period. However, of these, over a quarter (27%) didn’t realise they would be penalised for accessing their own money.
• The East and West Midlands sees the highest proportion of people (21%) in the country to have used a fee-charging machine. But worryingly, over 27% of people were unaware of the dangers of using a ‘convenience’ machine.
• In the Southwest many people believe that fee-charging machines do not display early warning signs clearly enough, if at all. 29% of consumers do not realise they will be charged for a cash withdrawal. 20% in this region used fee-charging machines.
• Those that live in London are most aware of machines that charge. Nearly one in four people (23%) in the city have used a fee-charging machine with only 13% of them not knowing it would impose a usage fee.
• Although only a small number of people in the Southeast (11%) have used a fee-charging machine, over a third (36%) of them were not aware they would be charged.

Research was completed in June 2004 using Marketing Sciences’ PanelWizard^TM survey. 1038 adults were questioned.

Background:

In 2000, Nationwide successfully fought to retain fee-free cash machines in the UK. At one stage, Nationwide threatened to sue Barclays Bank for its intention to unilaterally charge customers of other organisations for using its ATMs.

However, the industry agrees that cash machines in convenience locations can charge a fee. According to LINK, ‘convenience’ cash machines are “found in locations that would not normally justify the cost of installing a cash machine because fewer people are expected to use them (e.g. convenience stores, some garages etc).” Increasingly, convenience machines are found in high-street shops and other regularly frequented outlets, rather than remote locations with a low footfall of users, where there are no alternative ways for the public to withdraw money.

Nationwide operates cash machines in garages and other ‘convenient’ locations and does not charge fees.

In 2003 Nationwide called for greater transparency over cash machine charges. As a result, LINK agreed that from 1st April 2004 machines must give customers an early warning if they will be charged. The warnings can be either through a clearly visible sticker or on-screen message customers can see before inserting a card. LINK recently agreed further improvements to the visibility of early warnings which come into effect in July 2005 but Nationwide believes these do still not go far enough.