Post Office to offer current accounts
- 11 April 2013
- From the section Business
The Post Office is to offer current accounts in the UK, following a regulator's claim that the market offers little choice for consumers.
The new account, provided by Bank of Ireland, will be available in some areas in the coming weeks before a wider launch next year.
Few details have been released about the characteristics of the current account at this stage.
In January, a regulator said the market was dominated by a few providers.
The Office of Fair Trading (OFT) said that Lloyds, RBS, Barclays and HSBC held 75% of the market.
This led to a "lack of dynamism" from the banks, it said, together with a lack of choice for customers, meaning they were unlikely to switch to a different bank.
The Post Office, which has 11,500 branches, already offers a range of financial products in a link with Bank of Ireland.
Some three million Post Office customers already use products such as savings accounts, mortgages and insurance policies.
Customers of nearly all the major UK banks are able to use post office counters for some services, including depositing or withdrawing money from their non-Post Office accounts.
However, Santander customers, with the exception of its business customers and its Alliance and Leicester brand, are unable to do so at all.
High Street presence
The Post Office has not released details of the account yet. For example, it has not said how much interest would be paid, or whether there would be a charge for a packaged account.
"We have carried out extensive research into the current account market and the findings tell us that customers want simplicity, transparency and good value for money," said Nick Kennett, director of financial services at the Post Office.
Rachel Springall, spokeswoman for financial information service Moneyfacts, said that the new Post Office account could help to boost competition, depending on how it was set up and what rewards it would offer customers.
"The Post Office has a good High Street presence, perfect for people who prefer the more personal branch banking. It will be interesting to see whether this account will be as transparent and simple in structure as they suggest," she said.
Kevin Mountford, head of banking at comparison website Moneysupermarket, said: "Until now most of these challenger accounts have been aimed at specific audiences.
"The Post Office current account should have mass market appeal due to its large customer base and ease of access, so I expect this account will be very popular."
Other new entrants to the UK current account market in recent times include Metro Bank in 2010 and M&S Bank in 2012. Tesco Bank has also announced plans to launch an account soon.
However, the OFT review of the £9bn market said that the newcomers were yet to be in a position to provide a "significant challenge" to the established providers.
Richard Lloyd, executive director of consumer group Which?, said: "More competition is desperately needed to force banks to genuinely compete for customers. But switching banks must also be made much easier and people will need to see real benefits from new providers to encourage them to move."
This is not the first time that a current account has been available at post offices. The Girobank was set up by the General Post Office in 1968 and was the first to offer free accounts to individual customers.
It was taken over by Alliance and Leicester in 1990 and its name was dropped in 2003.