Post Office to offer current accounts

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The Post Office is planning to offer customers current accounts. Having recognised that their core business of selling stamps and weighing parcels is never going to make them millions, the Post Office has been dipping its toes in the financial waters, offering ISAs, savings accounts, travel insurance and bonds, but now seems to think that current accounts are where the real profits lie.

It is relying on the fact that, despite a relentless series of closures, the Post Office still has branches in hundreds of towns and villages across the UK and can appeal to those old-fashioned customers who don’t trust online banking and are nostalgic about the old days of Girobank.

The Post Office’s director of financial services, Nick Kennett, suggested that current accounts are a logical step. "We have been offering financial services for over 10 years and our announcement today means we will now offer everything from travel money to mortgages," he said. "The launch of the current account is part of our plans to improve customer experience and develop new products to bring in new business as we continue to build a profitable and modern network."

Previously, for many people a current account was for life but customers are more fickle now, looking around for little bonuses and extras to persuade them to change. Industry experts suggest the Post Office will be a serious challenger to the high street banks.

The fact that the Post Office’s financial services are backed by the Bank of Ireland might be the source of some concern. Although deposits are insured by the UK’s Financial Services Compensation Scheme safety net, it is unlikely that the Bank of Ireland will be making any of the more generous offers in the market. The Post Office’s interest rates on savings accounts are already fairly derisory, and it would be unusual if they offered any major inducements with current accounts.

There is already considerable criticism of the way the Bank of Ireland raised the interest rates of their tracker mortgages despite there being no change in the base rate. Anybody tempted to take out a Post Office current account would be advised to check the small print very carefully.

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