Financial Services Bill: Cashback Amendment to become Law

Chris in the House of Lords Chamber, standing to speak in Financial Services Bill debate. Wearing a covid facemask.
Lord Chris Holmes speaking in Financial Services Bill Debate in the House of Lords

Chris was heavily involved in the Financial Services Bill as it made its way through the House of Lords. The Bill received Royal Assent, becoming an Act of Parliament on 29 April 2021. At both committee and report stage Chris put forward several amendments, all broadly with the aim of improving financial inclusion and promoting innovation and fintech. He has written about all the amendments on his blog.

One final amendment, put forward by Chris and similar to a previous amendment regarding a review for cashback without purchase. The new amendment was reworded but with the same aim – of supporting access to cash by allowing businesses provide cashback without purchase.

Around eight million people still rely on cash – around 17% of the UK population – according to the Access For Cash review led by chair of Innovate Finance Natalie Ceeney CBE. 

But the country faces an access-to-cash crisis due to thousands of free ATMs and bank branches closing in recent years. This pattern has accelerated during the pandemic, prompting concern that many people could be cut off from accessing their money. 

This amendment provides that, in certain circumstances, the provision of cash does not constitute a “payment service” for the purposes of the Payment Services Regulations 2017. Persons would no longer have to be authorised by, or registered with, the Financial Conduct Authority (FCA) in order to provide that service.

Speaking for the Government, when accepting the amendment into the Bill, Lord True said:

These amendments introduce an exemption for cashback without a purchase, such that it will no longer be a regulated payment service. Under the current legislation, which derives from the EU’s second payment services directive, if a business or its agent, such as a corner shop or supermarket, wanted to offer you cashback without requiring you to make a purchase, it would have to be authorised or registered with the FCA to give you cash from your own accounts. That is a significant burden for even the largest of retailers, let alone small, local shops along the various high streets across the UK.

This amendment removes this requirement; it will take effect two months after Royal Assent. From that point, industry will have discretion to make the service available across the United Kingdom. Where the service is offered, customers will be able to walk into a local business that wishes to participate, such as a corner shop, café or pub, and withdraw cash without having to make an accompanying purchase.

Lord True, Financial Services Bill, 19 April 2021

Cash still matters, and it matters materially to millions. It is a key part of what it means to have a cash-enabled, easily accessed economy across the UK. It adds to financial inclusion. More than that, it adds to complete social inclusion.

Chris Holmes

We all need to think innovatively about how we can do more to enable, empower and unleash true financial inclusion across the UK. It matters economically, socially and psychologically. If we can enable it, it can address so many of the issues that have dogged our nations for decades.

Chris Holmes

I thank all noble Lords who contributed to the debate on this amendment and and I thank, particularly, the Minister and Treasury officials for their support and making this important change to the Bill.


The Sun, New law to force shops to give cashback to customers without buying anything set to get go-ahead today.

This is Money, By Jeff Prestige for The Mail on Sunday, People could get cashback from local retailers without first having to buy something under new proposal.

Retail Gazette, Cashback without purchase to be allowed by shops after post-Brexit law change  

City AM, Post-Brexit law change: Cashback without purchase to be allowed across UK

ACS, ACS: Government Supports Amendment to Introduce Cashback Without Purchase  

Your Money, New legislation to allow cashback without purchase

Money Expert, New Legislation to Permit Cashback Without Purchase

Report Stage Amendments:

Digital ID, Open Finance, Digital Infrastructure and Digital Payments

Bank of England and Financial Inclusion