On 18 August 2023, the Bank of England (BoE) published its response on the feedback received to its December 2022 consultation on its supervisory approach to wholesale cash distribution (WCD). The BoE has also published a Statement of Policy on the BoE’s supervisory approach to market oversight for WCD.

In its December 2022 consultation the BoE set out proposals for how it proposed to implement new powers in respect of the WCD infrastructure in the UK, also known as the wholesale cash supply chain. These powers are part of the amendments to the Banking Act 2009 (the Act) made by the Financial Services and Markets Act 2023. The consultation covered:

  • The BoE’s approach to the use of the powers (including enforcement) over firms that have market significance in respect of relevant functions in relation to WCD activities (market oversight) and entities that have systemic significance in respect of relevant functions in relation to WCD activities (prudential supervision).
  • Principles of supervision.
  • Certain information in relation to initial proposals for codes of practice on (i) information; (ii) third-party arrangements; and (iii) cash centre closure and market exit.
  • The approach to the allocation of fees.

In its response the BoE notes that respondents were broadly supportive of the proposed supervisory approach to its approach to WCD but provided some comments and feedback. In the response the BoE responds to the comments and feedback.

In terms of next steps:

  • The BoE intends to publicly consult on its proposals for codes of practice (and accompanying guidance) on: (1) information; (2) third-party arrangements; and (3) cash centre closure and market exit in Autumn 2023.
  • The BoE intends to publicly consult on its proposals for the statement of penalty policy in Autumn 2023.
  • It is intended that any new code of practice would come into force following the conclusion of the consultation process – and a firm would become subject to the requirements of the regime from the point of recognition under Part 5A of the Act.
  • HM Treasury and the BoE will engage with industry further on the fee scale later in 2023, before any regulations are made and laid before Parliament (subject to annulment by resolution of either House).

The BoE has also published a Statement of Policy on the BoE’s supervisory approach to market oversight for WCD. The Statement of Policy is required under section 206D of the Act, as amended. The BoE’s approach is based on the principles for WCD oversight (section 2 of the Statement of Policy) which further describe the regime’s purpose at a high level. The principles lay the foundation for the BoE’s analysis of the main risks presented to the effectiveness, resilience, and sustainability of the market. The BoE then assesses firms’ compliance with the regime to ensure that these risks are mitigated.