Post Office under fire for fees on new current accounts

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The Post Office is launching three new current accounts in a trial at 29 branches in East Anglia as it tries to become the latest challenger to the established high street banks.

Changes to make it easier for people to switch current accounts are being introduced this September by the Payments Council.


The Post Office will charge a fee for two of the three current accounts, due to be rolled out across the 11,500-strong branch network next year.

Only one account, the Standard Account, will be free. It can be opened with a £100 deposit and comes with a debit card and overdraft facility with a competitive overdraft rate of 14.9pc EAR (equivalent annual rate).

The Packaged Account and Control Account will charge a monthly fee of £8 and £5, respectively.

The Packaged account offers benefits including European Multi-trip Family Travel Insurance and Vehicle Breakdown Cover.

The Control account is aimed at customers on low incomes or who have problems with bank fines. It can be opened with a £20 deposit and comes with a £5 monthly fee, but no extra charges when payments such as direct debits are returned unpaid.

Nick Kennett, director of financial services at Post Office, said: "Consumers tell us they feel penalised by complex and expensive bank charges and fees. When they go overdrawn they often don’t realise how much it will cost and this can have a real impact on their finances."

However, consumer group Which? warned that low-income customers would be unwilling to pay to open a new account.

Richard Lloyd, executive director at Which?, said: "The monthly charge for the new basic bank account might put off people who need this service the most and the Post Office should think again if they find evidence of this."

Andrew Hagger of website Moneycomms said: "Avoiding unpaid fees may help some people, but others are likely to balk at paying £60 per year for a basic bank account."
A Post Office spokeswoman said there were no plans to phase out the Post Office Card Account, which is aimed at people receiving pensions, benefits and tax credit and comes with no overdraft facility or charges.

The National Federation of Sub-postmasters (NFSP) said last week it was concerned the new current accounts, which the Post Office first announced in April, would not deliver any significant income boost for the network.

Postal Affairs Minister Jo Swinson said: "This is just one way in which the Post Office is modernising to make sure it has a successful and sustainable long-term future.
"The Government is committed to supporting the Post Office which is why we've committed £1.34 billion to both maintain and modernise the network, keeping post offices at the heart of local communities."

Changes to make it easier for people to switch current accounts are being introduced this September by the Payments Council.

Customers can chose their switch date and the whole process will take seven days as opposed to the 18 days it currently takes. Payment agreements will be switched automatically to their new account.