Tesco to launch current accounts next year after banking sector reforms

| August 5, 2012 | 0 Comments

By
Jeff Prestridge

16:01 EST, 4 August 2012

|

16:51 EST, 4 August 2012

Tesco Bank chief Benny Higgins has said he will launch the supermarket’s long-awaited current account product next year once the Government has followed through its reforms to the banking sector.

Higgins said the trigger for launching the accounts would be the introduction of new regulations to make it easier for customers to switch bank accounts.

The easier switching plans were recommended by the Independent Commission on Banking and are expected to be implemented in 12 months.
‘The market for current accounts is not truly competitive,’ he said.

Tesco Bank website: A new current account 'redirection service' will be launched in September next year

Tesco Bank website: A new current account ‘redirection service’ will be launched in September next year

‘Only three per cent of bank
customers switch every year. The figure is not low because customers do
not want to switch, but because the process is too messy and
stressful.’

A new current account ‘redirection
service’ will be launched in September next year with the aim of
providing customers with a seamless switching service and compensation
for customers if banks fail to meet the new rules.

Among the changes will be the requirement that banks can make an account switch within seven days.

‘We will time our launch to coincide
with these much-needed changes,’ said Higgins.‘Until the process is
made easier, we will not enter.’

Higgins was talking on the eve of
Tesco Bank’s launch into the mortgage market with a range of fixed-rate
and tracker home loans offered either online or by phone.

Tesco has 6.5million customers for
its existing range of financial products – credit cards, savings
accounts and insurance.
Of the push into home loans, Higgins said 85 per cent of Tesco customers
were homeowners so mortgages were an ‘obvious area to have a presence
in’.
Those who take out Tesco mortgages will earn thousands of the popular
Clubcard points.

Tesco Bank says monthly mortgage repayments of £750 will earn Clubcard points worth £88 over the course of a year.
Penalty-free overpayments will be allowed, plus a payments holiday in some circumstances.

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Good to see a new entrant into the current account market with the national presence Tesco has. Effectively stores will be branches too. And unlike MS Bank, which is just a trading brand of HSBC, Tesco Bank will be truly independent (and nothing to do with RBS as some commentators on DM claim). My only concern is they’re not a full clearing bank so currently rely on [HSBC] for this under agency agreements (but no different to many other non-clearing banks/BS offering current accounts who have agency clearing with clearing banks e.g. NP, AIB UK, BoI UK, Cumberland BS, Coventry BS, ICICI UK etc). Not too certain I’d like my bank to know my shopping habits as well as all other aspects of my life through access to clubcard, DD info etc. will see what Tesco Bank brings to the market before judging.

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