New current account battle set to erupt if Post Office gets it right
The 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.Tagged in: banks, charges, Co-op, current account, Nationwide, post office
Recent Posts on The Money Blog
- Is there an alternative solution to the Government's £80m Money Advice Service?
- Much more is needed from the government to help those facing fuel poverty
- Payouts from PPI mis-selling scandal reach £12.5billion
- Disabled using high-cost credit after £28bn of financial support withdrawn
- Keep out payday lenders! Council bans payday loan ads from billboards and bus shelters
Latest from Independent journalists on Twitter