The Association of Mortgage Intermediaries is calling for clarification over whether the service will fall into the investment sector or not.
At the Labour conference in Brighton last week, Prime Minister Gordon 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 Department for Business, Innovation and Skills says the Post Office will increase the accessibility of “reliable financial products” for the public.
Business Secretary Lord Mandelson adds: “The Post Office is one of the country’s great assets. The time is right to build on these strong foundations and substantially increase the banking services it offers.”
But AMI director Robert Sinclair says the Government needs to be clear on whether it is looking to enter the investment area.
He says: “If it provides simple banking products, then it is a good idea but if it strays into investments I would expect the same level of qualification, training and professional standards as the rest of the financial serv- ices sector.
“The Government is using banking and financial services as interchangeable terms. It would be useful to know which one it means.
“Given the discussions that we have been having on the retail distribution review, if they are looking to offer financial services, it would be interesting to see how they plan to structure the Post Office. We welcome competition in the marketplace as long as it is on an even playing field.”
Asked whether the Post Office will venture into the investment arena, a Department for Business, Innovation and Skills spokesman says it is too early to say. He says: “We will be consulting on proposals later this year. It would be too speculative to comment on whether the Post Office’s banking arm will extend into the RDR space or not.”
The Government has already committed £1.7bn of funding to the Post Office, including £150m a year to help support its 11,500 branches to 2011.
Building Societies Association director general Adrian Coles says he is concerned the proposals might lead the Post Office to undermine building societies.
He says: “We already have 52 ‘people’s savings banks’ – building societies that are member-owned and provide valuable services to the communities in which they are based.
“Mr Brown will need to make sure that his proposals for the Post Office do not unfairly penalise building societies and undermine their valuable contribution.”
Yellowtail Financial Planning associate financial planner Mushtaq Jaigirdar considers the Post Office does not have the means or facilities to offer anything more than basic banking products. He says: “It would be far too expensive for the Post Office to go beyond basic products and services. The advice market is not who the Government is going to be targeting. Whether it will roll out a basic advice service in future for consumers who do not want to pay an up-front fee for advice remains to be seen but for now I think it will be simply a banking service.
“There will be a gap in the market for this type of service and it will take a large, wide-reaching organisation to be able to provide appropriate services across the country. The Post Office is well placed to do that.”
Evolve Financial Planning director James Norton says: “The Post Office is a major British institution that is trusted by the public. If it offers basic banking services it will be fine but once sales become involved there is a risk that position of trust could be abused, which would be disastrous.
“I am not sure the Post Office would be any different to a normal bank when it comes to filling a gap in the market for consumers. It will not be a free service, it will be looking to make money. I think the Government is doing this to capitalise on consumer mistrust of the banks, which have behaved badly.”
But London & Country technical manager Richard Morea says: “This has the potential to be a good idea but many of the services that Gordon Brown is proposing are already on offer from the Post Office. This is nothing new and you have to ask if people are going to take up the new plan. It may not end up being the centre of banking that Gordon Brown hopes.”