A decision by Barclays to pull out of an agreement allowing bank customers to withdraw cash from post offices for free has been criticised as “shocking”. The bank is the only one to scrap over-the-counter cash withdrawals at Post Office branches, with 28 other UK banks signing up to a new deal that means millions of people can continue to benefit from free access to everyday banking services. The move by Barclays prompted a wave of criticism, including from a regulatory body, and appears to be linked to a sizeable rise in the bank-funded fees paid to postmasters for providing these services. Barclays has separately announced its own proposals, which it said were designed to boost bank branch demand and improve access to cash.

The Post Office announcement comes against a backdrop of concern that as bank branches and cash machines continue to close, many people, particularly in rural or deprived areas, could find themselves unable to access cash. In March 2019, a major report claimed the UK’s “cash infrastructure” was in danger of collapsing. In 2017 the Post Office and the major UK high street banks struck a deal enabling anyone with a UK bank account to carry out a range of banking transactions at post offices. The following year the Post Office’s 11,500-plus branches handled more than 130m transactions on behalf of the banks. It said research had found that 28% of people had withdrawn cash at post offices in the last year.

The new agreement involves almost every UK bank and includes an “improved fee structure” under which postmasters will receive about three times more remuneration for providing these services than under the previous deal.