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New current account battle set to erupt if Post Office gets it right

Simon Read

PostOffice 225x300 New current account battle set to erupt if Post Office gets it rightThe Post Office has announced today that it is going to launch a current account. While it refused to reveal what kind of account it will be or exactly when it will be available, the move could be massively significant.

Despite shrinking its network almost in half in recent years, the Post Office still has around 11,500 branches and already has strong financial ties with Bank of Ireland, which will be providing the banking expertise behind the new launch.

That gives it a fantastic opportunity to give people a decent branch-based banking service, which has long since disappeared from our high streets as a result of mergers and cutbacks at Britain’s banks. In fact some 7,734 local branches have disappeared since 1990, according to research by the Campaign for Community Banking.

Will it be able to make the most of the opportunity? That depends on what kind of bank account it plans to launch. At the two extremes it could be a free basic account right through to an expensive packaged account.

It’s extremely unlikely to be the former as there’s no money in basic accounts (they have no overdrafts, so there’s no opportunity to sting people with expensive and lucrative charges).

But I hope it’s not the latter. Packaged accounts look likely to be the next big mis-selling scandal as thousands of people realise they’ve effectively been paying out for insurance they don’t need or can’t use, rather than getting lots of useful extras for their monthly fee.

The City Watchdog last month introduced a new crackdown on the flogging of expensive accounts which don’t actually give people value for money.

But beyond that, the current account market is long overdue for a shake up, not least to force the banks to offer us a decent service and fair charges.

Too many of us have stuck with current accounts with banks we’re fed up with because of their outrageous conduct or simply because they have shut down the nearest branch. Millions haven’t moved because there hasn’t seemed to be a credible UK-wide alternative available.

For a while it looked as if the challenge to the big high street banks would come from the supermarkets with both Tesco and Sainsbury’s believed to be planning to launch accounts. In the last month the Nationwide building society has upped its challenge to the big banks with two new accounts with more planned. Meanwhile the Co-operative is still hoping to complete the purchase of 600 or so Lloyds Banking Group branches to give it a network approaching 1,000 branches.

But the Post Office has a chance to get a massive march on its rivals by being first to market with a decent new bank account supported by a nationwide branch network.

Is it up to the challenge? I hope so.

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  • jagd1

    And that’s going to happen. The whole of government policy is now designed to ensure failure through basically not having any policy at all except “Something will turn up”.

  • 1J2ackBrian

    Could be the making of the Post Office and bring back many of the now closed up, local branches.

    Many of the high street banks have closed – our village has lost two, Lloyds, some years ago and HSBC more recently, both were popular banks. Our post office – still open in spite of everything, could find it very profitable encouraging all of those who feel let down by the closure of the banks and like the idea of the local post office handling their money – especially, shop keepers and those who need to pay in money. With post offices having cash machines – like in France, this exciting enterprise could revitalize many local communities who have suffered through the loss not only their banks but also their cherished post office.

  • bawbag1

    Backed by Bank of Ireland??

  • cbross

    You answered your own question with your fourth word – they are idiots!

  • http://www.facebook.com/ken.ward.3304 Ken Ward

    you talk with your head up your anus, you must be one of the borrowers that savers have been subsidising for four years, i hope the interest rate goes up soon to make you suffer.

  • dabrooker

    “A descent return on your savings”? Would that be one that goes down?

  • ayshf_m

    The post office actually equals the Bank of Ireland avoid if you’ve any sense.

  • http://www.facebook.com/bob.andson Bob Andson

    it would be a nice alternative to being compelled to use the banks, competition, I,m all for it.


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