Investment: No, POs cannot be consigned to history

THE POST Office now calls itself Consignia, but the name is as much about innovation as image. It is joining the high-street banks to broaden its
products and make financial services accessible to everyone. Its reasoning is that, as nine out of 10 people live within a mile of their local post office, the network is bigger than any bank's with 28 million customers a week. They include people on social security whose paper-based allowances will be paid electronically in two years' time, business that is too important for the 18,000 branches to lose, even the 600 operated directly and 900 managed by agents. The smaller ones reach into remote, rural areas in the UK where they could be a substitute for disappearing banks. Amid the razzle-dazzle about universal banking services – online access to other banks – it should be noted that the Post Office is already offering basic banking on top of its traditional transactions. The modernisation began with Alliance & Leicester's takeover of Girobank, which allowed personal and commercial customers to write cheques and make deposits via Transcash at post offices as well as its 160 Link cashpoints. This relationship accounts for 30 million transactions per year and
one in every four pounds in circulation. Facilities were extended to customers
of the Co-op and Lloyds TSB and the electronic banks, Smile and Cahoot. After
trials in Cornwall, 15,500 post offices in England and Wales can also be used
for accounts with Barclays (the disappearing bank). But the leaves will be falling in 2002 before the Post Office reaches the sophistication of a high-street bank – ie showing balances on IBM screens.
Universal banking will not be available until early 2003 when a Post Office
Card Account will be available for customers who want their social security
payments switched to a bank. Yet someone with a simple lifestyle can already rely on the PO for virtually all financial transactions, including council and housing association rents. The average household gets 130 bills a year, and more than a dozen outgoings can be paid over the counter – nine out of 10 without a fee – including gas, water, telephone, TV and electricity, income tax, store cards and homecare schemes. The Post Office has long operated its own basic bank accounts, the Ordinary one often inherited from childhood. This allows pounds 100 in cash to be withdrawn at any one time (pounds 250 at designated branches). The Investment Account offers slightly higher interest and withdrawals normally require a month's notice. Neither account provides a chequebook, but postal orders make a workable substitute. However, it costs 75p to get a 50p postal order and pounds 20.80 for a pounds 20 one. However they can be cashed at any other post office, and are honoured in 48 other countries. Even better is MoneyGram, operated in association with Thomas Cook, which enables senders to wire money from certain post offices within minutes to 22,000 outlets in over 100 countries. The fee starts at pounds 12 on sums up to pounds 200, while anything between pounds 750 and pounds 5,000 will cost pounds 44. American Express travel cheques can also be obtained at many post
offices along with 25 foreign currencies. Unused currency can also be swapped
back into pounds without further commission. The range of foreign services
includes travel cover, underwritten by Aon Risk Services. There is no upper
age limit, and the yearly cost for a globe-trotting family would be pounds
152. And limited healthcare is free within the European Economic Area,
provided you obtain form E.111 – from a post office. Branches are now selling Stakeholder pensions issued by Standard Life.
National Savings have always been available through post offices, including
various certificates. Cash Isas up to pounds 3,000 can also be bought there.
Then there are those crocks of gold: Premium Bonds and the National Lottery.
The Post Office is the biggest dispenser of lottery tickets, though only 4,000
branches have the necessary terminals, while 5,000 have terminals set up for
scratch cards. The availability of other services varies – 2,000 post offices do not stock BT phone cards and 100 cannot send a MoneyGram, while only 600 can
provide foreign exchange over the counter. However the total number of cash
machines is being expanded from 400 to a planned 3,000, although the Post
Office already ranks fourth for such a network. The only drawback to all this is the pressure on staff and space, as more people queue for more complicated services, especially in unbanked districts. Andrew Frewin, a spokesman for Postwatch, says: "Access to cash is vital for many users. How well the universal bank works will depend on marketing, but the more products the better, as smaller post offices need the business to survive."
Caption: Consignia: it's first class Copyright:
Independent Newspapers(UK) Limited

John Burke