The last week has been all about current accounts. First the Co-op announced a deal in which it has bought 632 branches from Lloyds. That’s nice for the Co-op (it got the lot for a mere £750m, or about half the branches’ book value). It might also be nice for the consumers who are to be moved over (by the end of next year some time). The Co-op is still a mutual and, presumably as a result, has very high customer satisfaction ratings (it usually comes second to First Direct).
However, as my colleague Phil Oakley pointed out, it probably won’t make much difference to the high street as a whole. Why? “Scour the best-buy tables and you’ll struggle to find the Co-op listed.” It might have polite call centre staff, but its interest rates and current accounts don’t offer much its new customers don’t already get from the much-loathed Lloyds.
With that in mind, I’m more interested in the new current account launch from Marks & Spencer. It isn’t a free account. You can pay either £15 or £20 a month, in return for which you get afee-free overdraft (with no interest on the first £100), exclusive access to a 6% savings account in which you can deposit a maximum of £250 a month, and a variety of benefits. Pretty much all financial journalists have pronounced it to be dreadful. Ruth Jackson, writing in MoneyWise, sums up the general feeling: her view is that the account shows M&S “jumping on the profit bandwagon” that is packaged accounts, “along with the high-street banks”. I’m not sure that’s entirely fair.
Take the £15 account: it costs £180 a year, but you get 48 hot drink vouchers (value £127), a birthday gift (£10), more vouchers (£85), and if you use an M&S debit card when you shop, even more vouchers. If you sign up now you’ll also get some extra 20%-off vouchers. That adds up to a minimum of £222. Clearly, if you don’t love M&S, this isn’t the account for you. But if you shop there all the time anyway and quite like coffees out, it surely is.
The real point, however – and the reason to be pleased with a launch from the likes of M&S – is that competition is finally emerging in the British market, and we almost have an obligation to take advantage of that. Just as you rather lose your right to stand around complaining about the government if you can’t be bothered to make democracy work by voting, so you rather lose your right to complain about the banks if you can’t be bothered to make competitive capitalism work by moving your account. So get on with it.