Post Office banks on current accounts

The Post Office will offer current accounts from later this year, promising “simplicity, transparency and good value for money”.

Three million people already use the Post Office’s other financial services, such as savings accounts, car insurance, cash machines and credit cards, but this is the first time it is expanding into the current account market since it sold off the Giro bank 1990.

With over 11,500 branches, the Post Office has more locations than all of the UK’s retail banks added together. It says the new current account plans mean it will be easier for customers living in rural communities to access their money, as 99.7 per cent of people live within three miles of one of its branches.

More competition?

Nick Kennett, director of financial services at the Post Office, said: “We’ve carried out extensive research into the current account market and the findings tell us that customers want simplicity, transparency and good value for money.

“With over 11,500 branches, which is more than all the UK banks combined, we can provide this through the most convenient and accessible retail network in the UK.”

With over 11,500 branches, the Post Office has more locations than all the UK banks combined.

The Post Office launch comes at a time when plans are afoot to make it much easier for people to switch current accounts and shake up competition in the banking sector. Tesco Bank, a branch of the supermarket giant, has also signalled its intention to move into the current account market when the rules change.

In September, the Payments Council will introduce changes to make it easier for customers to switch banks, ensuring that payments are automatically redirected to new accounts and the entire process takes seven working days rather than the current 18 days.

The Post Office’s current accounts will be offered in partnership with Bank of Ireland, as are its other financial products. The new financial watchdog, the Financial Conduct Authority (FCA), is aware of the plans, the Post Office said. Customers will be able to register an interest in the new current account through the Post Office website.

‘Unhealthy dominance’

It remains unclear what the Post Office current account could look like – for example, whether it will be a paid-for product – as well as which branches will offer the accounts, but consumer groups said more competition in the sector was a positive step.

At the moment, the big five banks – HSBC, Royal Bank of Scotland, Lloyds, Barclays and Santander – have 85 per cent of the market and many financial commentators believe customers could save money if more options were available.

Which? executive director Richard Lloyd said: “We welcome new entrants to the current account market to increase consumer choice and tackle the unhealthy dominance of the biggest banks.

“More competition is desperately needed to force banks to genuinely compete for customers. But switching banks must be made easier and people will need to see real benefits from new providers to encourage them to move.”