The Bank of England’s wholesale cash distribution market oversight regime - Annual Report 2025

Foreword

Victoria Cleland
Chief Cashier and Executive Director, Payments

Cash is, and will continue to be, important for many people across the United Kingdom. We also know that the ability to access cash holds particular importance for certain groups in society. The Bank of England (the Bank) is committed to continuing to provide banknotes for those people who want to use them.

Wholesale cash distribution (WCD) is critical to maintaining monetary and financial stability through promoting confidence in the currency. The participants of the wholesale cash supply chain manage the functions related to the storage, sorting and redistribution of notes and coins which are sent to bank branches, ATMs, the leisure industry and retailers around the UK. To help ensure the WCD system can continue to play that role, our new supervisory oversight regime is designed to promote the effectiveness, resilience and sustainability of the WCD industry.

Although cash is still important to many, there has been a notable reduction in the transactional use of cash and an associated reduction in wholesale processing activity. This has led to an increased likelihood of market consolidation in the WCD industry. If there is further consolidation in the future, the Wholesale Cash Distribution Market Oversight (WCDMO) regime is designed to provide the guardrails to manage developments in an orderly fashion, enabling cash to continue circulating and mitigating risks of disruption to consumers and businesses who use cash.

The Financial Services and Markets Act 2023 established a new statutory oversight regime for WCD by inserting a new Part 5A into the Banking Act 2009. This year marked a significant milestone for the Bank, as HM Treasury made Wholesale Cash Oversight Orders in respect of firms recognised as having market significance. This meant that the WCDMO regime was fully operationalised on 12 June 2025. Making the regime effective will require continued close collaboration with HM Treasury, The Royal Mint, fellow authorities including the Financial Conduct Authority as well as the WCD industry, as we work towards the common purpose of ensuring continued access to cash for businesses and consumers in the UK.

Following the full operationalisation of the regime, this is the first formal annual report on WCDMO that we have published since the Bank was granted new powers through the Financial Services and Markets Act 2023. This first report provides context and focuses on the work undertaken since the legislation was passed. We recognise that the regime has only been fully operational since June; as it continues to embed, future Annual Reports for WCDMO will provide further detail on the evolution and progress of the Bank’s supervisory approach.

I hope this report gives a clear view of what the Bank has done to establish the regime and our future priorities in promoting the effectiveness, resilience and sustainability of the WCD industry.

Victoria Cleland
30 October 2025

Why does the Bank of England supervise the UK wholesale cash distribution industry?

Wholesale cash distribution is a key part of protecting access to cash

Wholesale cash distribution (WCD) is a key part of enabling the public’s access to cash. The WCD system consists of cash centres around the UK where cash is stored and sorted, and cash in transit vehicles that transport it to individual bank branches, automated teller machines (ATMs) and retailers. Through the Note Circulation Scheme (NCS), the Bank of England currently contracts with private sector firms to undertake the functions of WCD in the UK such as wholesale storage, authentication and quality sorting, and redistribution of fit notes. The wholesale cash system therefore plays an important role in allowing the public to use cash as they choose. Though the transactional use of cash has declined, nearly 15% of people still consider cash to be their preferred payment method^{footnote [1]} and 1.2 million people in the UK rely on it for almost all of their day-to-day spending.^{footnote [2]} The Bank is committed to supporting cash as a viable means of payment.

The Financial Services and Markets Act (FSMA) 2023 introduced new oversight powers for the Bank

In June 2023, FSMA 2023 was passed into law, giving the Bank market and prudential oversight powers over the WCD industry, under part 5A of the Banking Act 2009. Over the past two years, the Bank has developed a supervisory framework, in consultation with industry, to embed these legislative powers.

The market oversight regime supports the Bank's statutory objective to maintain monetary and financial stability

The Bank has an objective to maintain monetary stability in the UK. The new market oversight and prudential supervision powers over WCD help to support this objective. The Bank’s role under the WCDMO regime, which stems from the legislation, is to manage risks to the effectiveness, resilience and sustainability of the WCD industry.

Recognition process

In June 2025 HM Treasury concluded (in consultation with the Bank and other authorities) that, for the firms listed in Table A, it is likely that any significant deficiency in, or disruption to, the performance of their relevant functions in relation to WCD activities would likely undermine the effectiveness, resilience, and sustainability of WCD in the UK.

The factors under consideration included, but were not limited to, firms’ involvement in the Note Circulation Scheme, the relationships between financial institutions (FIs) and operators, the number and (where known) the size of WCD customers, the value of cash being deposited by/dispensed to WCD customers, the value of banknotes and coin being processed at cash centres, and the operators’ storage capacity and utilisation, and (where known) the respective market share of the firms.

How does the Bank of England approach supervision of the UK wholesale cash distribution industry?

The Bank has published our approach to wholesale cash supervision

Following consultation required under the legislation, the Bank published the Statement of policy on the Bank’s supervisory approach to market oversight for wholesale cash distribution on 18 August 2023. This document provides transparency on the Bank’s supervisory approach to WCDMO and makes the Bank accountable to the public by setting out its objectives and strategy for meeting them. The Bank intends to update the policy statement as necessary to ensure it remains current. It may also be revised and reissued in response to significant legislative and other developments that result in changes to our supervisory approach.

The Bank has published ‘Codes of Practice’, setting minimum standards that recognised firms must meet

The Codes of Practice set the minimum standards that recognised firms must meet; they are outcomes-based and aim to ensure an effective, resilient and sustainable WCD infrastructure. The Codes of Practice, supporting Guidance, Data Catalogue and Reporting Form were published on 31 March 2025.

The WCDMO regime will allow the Bank to more accurately monitor and mitigate against current and future risks in the WCD market. The Bank’s regular engagement with firms, data submissions and supervisory discussions are continuing to help develop our understanding of market activity. The Bank will continue to prioritise efficiency in its approach to supervision, with quality data provision being a key enabler of this in the future.

The preparatory work and publication of the Codes of Practice, as well as the establishment of the oversight fee framework, are integral stages in working towards the Bank managing the risks to effectiveness, resilience and sustainability of the WCD industry.

Market-wide risks

The WCDMO regime requires recognised firms to submit a range of data to the Bank. The Bank carried out work in consultation with industry participants to identify the data and information needed to give us a comprehensive understanding of the key risks facing the market. This data will be an important input to the supervision process, enabling the Bank to identify and monitor risks to the WCD market. Recognised firms will have to fully comply with data reporting requirements by end-January 2026. Below is our current view on the key risks facing WCD.

• Cash centre closure or market exit: high fixed costs and excess capacity resulting from declines in transactional use of cash could result in further cash centre closures across the WCD market, as firms strive to lower costs and increase efficiency. The Bank will not seek to stop commercial solutions to the challenges faced by the industry, and does not seek to bind firms into the WCD market, but endeavours to ensure structural changes can be managed in an orderly way that does not jeopardise the stability of the wider wholesale cash infrastructure. The Codes of Practice set out requirements for recognised firms that intend to close cash centres or leave the market, including notification timelines and data submissions. Following any such notification, the Bank will review the data and information in order to make an assessment of the likely impact. When assessing potential impact, key areas include processing capacity, storage, geographic coverage, contingency planning, and ability to meet market requirements under stressed scenarios. Following the completion of the review, the Bank would set expectations for any mitigating actions it deems necessary to ensure the proposed solution does not negatively impact the effectiveness, resilience or sustainability of the market. Where we identify issues that may negatively impact the effectiveness, resilience, or sustainability of the market, the Bank will work with the relevant firms to find a suitable solution. Where a suitable compromise cannot be agreed, the Bank may direct the firm to take specific actions, such as amending their plan.
• Surplus coin: the volume of cash transactions has fallen by over 75% in the past ten years^{footnote [3]} as the public have generally moved towards other means of payment. As transactional use of coin has reduced, a build-up of surplus coin has been impacting some firms’ operations and funding costs. In response, HM Treasury (as the policymaker), the Bank (under its WCDMO responsibilities) and The Royal Mint (as the issuer of coin in the UK) are undertaking ongoing work to better understand these issues and associated risks.
• Concentration in critical third-party providers: the regime requires firms to submit information relating to critical third parties, including materiality assessments, due diligence and risk assessments. This will enable the Bank to analyse and monitor the potential for operational, financial or concentration risks to materialise. Examples of critical third parties to the 12 recognised firms where there may be risks from a concentration of suppliers include:
  • cash in transit providers, which transport cash to and from issuers, cash centres and customers; and
  • cash processing equipment manufacturers, which provide the means to count, authenticate and quality check banknotes and coin.

In our next annual report for WCDMO, we expect to provide a more detailed assessment of these risks, supported by analysis of the data submitted by firms. At that point, the Bank will aim to provide a more complete view of the extent to which risks to the effectiveness, resilience and sustainability of WCD throughout the UK have been managed. Establishing and implementing the oversight regime has been important in developing the Bank’s understanding of risks in the WCD market and giving us the tools to mitigate these risks if necessary. Continued co-operation from industry, as we’ve seen during the initial phase of the regime, will support us in achieving Parliament’s objectives for market oversight.