Tuesday, 9 November 2010

Don't bank on the Post Office

At a time when the Government is saying that it is encouraging greater competition in the UK banking market, wanting there to be more choice for customers, the decision not to allow the Post Office to launch its own bank seems to go against all they have been saying. The official reason is that it would be 'time consuming and too capital expensive'. With a network of 11,500 branches across the country the Post Office would be ideally placed to take on the big banks, with an established and trusted brand and ease of access, two of the key critiera for access to the banking sector, according to the OFT report on the barriers to entry, published last week. The timing of this decision seems premature when the Independent Commission on Banking has only recently started work and is not expected to report it's conclusions until next October.

What the Government is doing is enabling more customers of the high street banks to access their current accounts in branches of the Post Office. What they don't say is that by doing this they will encourage the high street banks to close more of their branches, particularly those in more remote or poorer areas. How is this really helping those on low incomes or the unbanked to get access to Financial Services?

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