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Postman Pat to become Banker Pat?

Prime Minister Gordon Brown outlined plans to make the Post Office into a national ‘people’s bank’ offering a full range of financial products this week.

Revealed in his Labour conference speech, Brown told delegates how he wanted the 11,500 branches to be the centre of the nation’s banking – but is this an innovative way to take power away from the oversized banks or just another clumsy, ill-advised attempt to fix a broken sector?

In his speech on Tuesday, Brown said: “I want the Post Office to play a much bigger role, bringing banking services back to the heart of people’s communities.”

The Post Office currently offers savings accounts, savings bonds, mortgages and credit cards but Brown wants it to increase its proposition and offer all banking services and further affordable products through its 11,500 nationwide branches.

Almost as soon as he had stopped speaking, the Building Societies Association took a swipe at the plan – director general Adrian Coles said the UK already has 52 ‘people’s banks’ in communities across the country, and said making the Post Office a big banking player could be another blow to the already beleaguered building society sector.

He said: “Mr Brown will need to make sure his proposals for the Post Office do not unfairly penalise building societies and undermine their valuable contribution.”

And advisers were equally as unimpressed. Association of Mortgage Intermediaries director Rob Sinclair said if the Post Office wanted to dabble in more complicated banking products it had to be ready to train up its 180,000 staff to financial sector standards. London & Country technical director Richard Morea said the Post Office already offers a wide range of products, including Bristol & West mortgages, and has yet to make a big dent in the financial sector.

This announcement may not have impressed postal staff either – only last year staff told the Daily Mail of an exodus after they were pushed too far to ‘hard sell’ products like savings and currency exchanges.

But then again it may be a necessary strategy – Halifax recently revealed it was to assess the viability of its 300 agency desks in small communities and reports that the EU Competition Commission is ready to shut down a large percentage of the bank’s branches are still widely circulating. Also, the creation of another bank may mean another viable mortgage lender offering competitive products, injecting a bit of life into a moribund market. It could also be a stimulus for the nation to begin saving, a very much needed exercise.

What do you think? Is this an innovative way of keeping the mortgage market alive while improving the nation’s savings balance? Or would this just flood the country with under-qualified direct sales advisers whilst delivering the building society sector its final death blow?

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Postman Pat to become Banker Pat?
    It’s certainly in line with the FSA’s plans for the future of the IFA sector, isn’t it? Dumb everything down to cheap and basic products sold by people with minimal experience and/or qualifications. But what about my existing plans? Ah, not what we do, madam ~ for advice on those you’ll need to consult an IFA. But my IFA had a nervous breakdown and closed down his business two years ago. The only other IFA in town charges fees beyond my means. But hey ~ this is part of the Treasury’s grand vision for the future of financial services in this country, as implemented by the mandarins of Canary Wharf.

  2. Post Office Banks
    I thought that the Cooperative Bank had already announced that it would be offering its services through post offices. Either this is another GB re-warmed “initiative” or he has plans to complete with the co-op!

  3. Post Office Banks
    I think this is another ‘vote touting’ proposal, because he knows the public are in sympathy with the P.O. and against the hundreds of closures we’ve seen recently. Just what the industry/country needs….another aggressive selling bank with no morals. Every proposal from now on will put labour first and the country second.

  4. Post office banking
    This is most definitely Groundhog day. Way back in the 70s (I think) the then Labour government set up Girobank (from which the Nation’s benefit recipients derived the word “Giro” meaning their weekly benefit cheque). In the 90s the Tories sold Girobank off to Alliance and Leicester. History obviously does repeat itself.

  5. Competition
    Absolutely no fan of GB, or anything else New Labour (the ‘New’ has been totally trashed by GB anyway)
    However, the high street banks have given appalling service to customers requiring just basic banking services, seeing them as only good for ripping off on the charges front and/or selling dodgy, overpriced products to.
    There is a need for the large scale provision of simple, inexpensive (read preferably free) basic banking facilities in the UK, something the big banks tell us they cannot afford to do unless they stitch up their customers.
    RBS having broken ranks and drastically reduced its charges for ‘unpaid’ items and ‘unauthorised’ O/D’s suggests that even some bankers are having second thoughts. What effect this will have on the banks appeal against the ruling in the ‘Unfair Charges Case’ we wait to see but this is a move in favour of the consumer. No thanks to that ‘Champion of the Consumer’ the FSA who have consistantly sided with and supported the banks.
    Coming back to ‘Banking at the PO’ the problem is how to provide this in a sufficiently professional manner without loosing money.
    The barriers to entry in this area are very high, if it is to be done properly, but there is a basic network in place already and it may be worth doing, if only to stir up the market place. The banks would undoubtedly fight it tooth and nail and if they realised that it was actuallt going to happen would suddenly find them trying to provide better services.
    So it would be good to see how feasible GB’s ideas are. I doubt there is much mileage in them and I expect they are just another of his political ‘shinanigans’. Not sketched out on the back of an envelope, not ‘Big Brains’ style, but equally not thought through, like his taxing of pension funds and selling off the BoE’s gold reserves at the lowest point in the market for many a year.
    So just another bit of kite flying for political purposes!
    But actually there may be merit in looking at this, even if only as a way of rebalancing banking power in the UK.
    Regards to you Adrian, I don’t think you need worry unduly.

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