For a launch supposedly representing a fresh approach to banking, the current account unveiled by M&S Money this week feels as stale as its fashion lines.
Marks & Sparks opened its first bank branch in its flagship London Marble Arch outlet on Thursday in what it unfortunately tagged the launch of “new-fashioned banking”.
Stores in Glasgow, Aberdeen and Edinburgh will be among the first to boast bank branches, with some opening over the coming weeks.
The timing is impeccable, coming in the wake of the Libor scandal, the RBS systems meltdown and this week’s HSBC money laundering revelations (although M&S Money is backed by the latter).
It has a chance to capitalise on disenchantment with the high street banks by offering a genuine alternative that really does give them something to chew on. M&S has done nothing of the sort, coming up with an expensive product relying too heavily on brand loyalty and too little on innovation and meeting customer needs.
It’s a shame, because its branch outlets do offer something different by matching store open hours (as you would expect Tesco to do when it arrives on the current account scene). That means evening and weekends – a true seven-day banking operation. A development many people would welcome, if the existing high street banks bothered to work out what their customers actually want and need.
Judging by the Premium current account, however, M&S Money doesn’t want or expect to trigger a surge of business away from the high street banks.
With a fee of £20 a month (£15 with travel insurance excluded), it is aimed at loyal customers – hundreds of thousands already have M&S Money savings and insurance products – and middle market (rather than mass market) consumers with healthy credit records. The account has total perks worth twice the annual fee, claimed M&S Money, including travel insurance and store vouchers.
Sounds good, but unless you’re a regular M&S customer you’re not going get your monthly fee’s worth from the account add-ons.
Unfortunately, however, that wouldn’t be unusual. M&S Money may offer the seven-day banking and store perks, but the current account is depressingly similar to the packaged accounts offered elsewhere on the high street. In other words, it will seek to attract custom by offering so-called value-added extras that many people won’t use, rather than providing what they really do want.
The Financial Services Authority (FSA) warned earlier this year that many packaged current accounts are poor value and rife with perks that to many customers are useless. One in five adults has a packaged account, according to the City regulator, yet Which? research found that a third don’t use any of the benefits included.
The FSA is poised to issue new rules for packaged accounts that are likely to force banks to outline the value of the benefits and ensure customers are eligible for them. While that would be overdue, it wouldn’t be enough to curtail the mis-selling of packaged accounts.
A core of loyal M&S customers will be happy to pay £20 a month for its current account when it launches in October, but many will be falling into the same trap laid by the banks to which it could have offered an alternative.
The pensions industry has spent much of this week batting away accusations of excessive and/or hidden charges. It was goaded into indignant action first by Labour leader Ed Miliband and then thinktank RSA. The latter aimed fire at pension providers over the range and extent of the fees they levy, claiming the costs borne by investors account for up to 40 per cent of their pension savings.
The industry hit back, retorting that the claims were not only inaccurate, but damaging to confidence in pensions in a week when new figures showed that company pension membership has fallen to a new low.
The dispute underlines the complexity of the issue. Pension charges are far lower than they used to be, yet that’s little consolation to those paying through the nose for older plans with exit penalties that effectively bar them from transferring out.
The overarching point is about transparency, the lack of which is largely responsible for the ongoing confusion over how much pensions really costs.
For their part, providers, industry bodies and the regulator must focus on making pensions easier to understand and easier to switch. Then they can sit more comfortably on their moral high horse when the accusations fly.
As for the rest of us, not only should we pay more attention to ensuring we’re not being ripped off, but we have to remember that the biggest single influence on the pension pot we end up with is how much we save into it. Now that’s transparent.
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Saturday 25 May 2013
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