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Post Office bank plan unveiled

02 December 2009  |  5246 views  |  0 London -- Routemaster red double decker bus

The UK government has launched a public consultation on proposals to offer more financial products and services through the Post Office network.

Under the plans, a wide range of accounts - including current, children's savings, business and budgeting - would be offered from the Post Office's 1150 branches across the country. It would also be a more significant player in the mortgage market.

The government hopes the plan will help secure the future of the network, which has closed branches in recent years, with people going online for its traditional services. The move would also increase competition, with the Post Office joining Tesco as a new rival for traditional high street banks.

Peter Mandelson, business secretary, says: "Growing financial services at the Post Office will help secure the future of the network and give people access to a full range of banking products at an institution they trust and value. At a time when some banks and financial services companies are seeking to reduce face to face contact with customers, the Post Office stands out. It offers a trusted brand, and has more branches than the high street banks combined."

The Post Office already offers a range of financial services, including savings, insurance, lending, and foreign currency products, but in September Gordon Brown said he wanted it to play a bigger role.

"I want the Post Office to play a much bigger role, bringing banking services back to the heart of people's communities," said the prime minister.

The Post Office will work with the Bank of Ireland, with which it already has a contract, on the new products. This has drawn criticism from campaigners who argue a UK bank funded by the taxpayer should benefit.

Lindsay Mackie, from the New Economics Foundation, told the Guardian that the creditworthy arm of the taxpayer-owned mortgage lender Northern Rock should be used.

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