Govt expands Post Office mortgage and savings offering
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Business Secretary Lord Mandelson today announced a major expansion of the financial services offered by the Post Office, kicked off with £180m of new funding.
The Government today published its response to its consultation on Post Office banking.
It announced plans to use £180m of new Government funding in 2011/12 to maintain the network at around its current size of 11,500 branches.
This is in addition to the £1.7bn that is already being invested between 2007 and 2011.
The Post Office will offer a new mortgage product with a 90 per cent loan-to-value ratio aimed at first-time buyers.
It will also increase its lending substantially, aiming to double the value of its mortgage book in the financial year 2010/11.
The proposals will see the Post Office launch a saving gateway account this year for people of working age who are on lower incomes. The Government will add 50p for every £1 saved to help kick-start saving habits.
The Post Office will launch a weekly budgeting account, to help people on low incomes manage their household budgets and save money through discounts for using direct debit to pay their utility bills.
The Government also announced plans to launch a children’s savings account in the next twelve months, encouraging children to save through visits to their local Post Office, as well as a current account that will be accessible from any Post Office in the country.
Negotiations are taking place to give access to RBS and Santander current accounts via the Post Office, which would make around 86 per cent of current accounts accessible at Post Offices.
In addition, a new agreement between the Post Office and Santander will allow all its business account holders to access their accounts at the Post Office. The Post Office will also explore the development of a Post Office business bank account.
The Government also announced an intention to consult on making sure banks make an “appropriate contribution to community lenders”, proposing using a new community levy to be funded by retail banks that will support a link between credit unions and Post Offices.
Lord Mandelson says: “Since the global banking crisis we have set about reinventing the financial services industry piece-by-piece, building a system that is fairer, trusted and more responsible.
“Today is the next step in that process. The Post Office is a well-loved community institution and this move will bring more banking services back to the heart of those communities.”
Business Minister Pat McFadden adds: “The Post Office can provide a range of good value, simple financial products for everyone. These are the clear messages that people have given us and we are acting on them – a major step towards making the Post Office a sustainable neighbourhood banking service.”
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