UK banks offered olive branch over Post office plan
The UK Post Office on Tuesday said banks could opt out of its controversial plan for new universal banking services, by striking separate commercial agreements giving customers access to their bank accounts through Post Office branches.
Post Office plans to launch its own no-frills banking service, targeting the financially excluded, have come under fire from banks which claim they replicate existing or planned services of their own.
Banks have also bristled at being asked to contribute £130m ($189m) a year to running the universal bank, on top of start-up costs of about £50m.
The Post Office has sought to defuse criticism by offering to support other banks’ no-frills accounts through its network.
These accounts are targeted at people receiving social security payments. They offer basic services such as direct debits, but no overdraft facilities.
The Post Office already has agreements allowing customers of Alliance & Leicester, the UK mortgage bank, the Co-operative Bank and its internet arm Smile, Lloyds TSB, Barclays and Abbey National’s internet operation Cahoot to use the Post Office network.
Lloyds and Barclays on Monday became the latest banks to detail plans for their own no-frills accounts, and the Post Office is willing to extend this access to other banks as part of a commercial agreement.
Basil Larkins, managing director network banking at the Post Office said: “Our aim is not to compete with other financial institutions over basic bank accounts, but to support their services with a simple account for the payment of benefits and expand the existing successful partnerships we already have with a number of banks.”
Stephen Byers, UK Trade and Industry Secretary, backs the universal bank plan as a way of raising cash for the Post Office, which faces the loss of £400m a year when benefit payments are automated.
The Post Office said it plans to hold individual talks with banks and hoped to tie up reaction to the latest proposal by the end of November.
