Marks and Spencer Decide not to Offer ‘Free’ Banking.

by Mark Johnston

Marks and Spencer decide not to offer ‘free’ banking.

Marks and Spencer has recently announced it is to launch an in store banking service from this summer, backed by the HSBC. Legally though, the new bank is structured as a separate entity to HSBC, therefore when it comes down to investor protection, savers are not covered by HSBC.

The first bank branch is to open at the group’s flagship store at marble arch, after which the retailer plans to open a total of 50 branches in stores over the next 2 years, thus creating 500 jobs by the end of 2013.

It is the first major retailer to launch full banking services, despite Tesco’s recent try to get in to the banking sector, it has been delayed as it is struggling to build systems and gain regulatory clearance.

The retailer has already launched its first bank current account, for which they can pre-register for, but rather than taking on the big four high street banks they have made the decision to charge £15 to £20 a month for their accounts.

With many people now wanting products from the financial sector to be more transparent, it appears that this is what Marks and Spencer are trying to achieve with charging for accounts.

Gary Greenwood, Shore capital analyst said of the retailer “they are saying: here is a transparent product, but you do have to pay for it”.

The premium current account offers which costs  £20 a month offers customers insurance and in store benefits and customers choosing this account will also be given access to a savings account with a fixed rate of 6%.

The normal current account costs just £15 a month and comes with similar banking and rewards and a lower amount of potential benefits but with out insurance.

Both accounts come with an automatic £500 overdraft, although the first £100 of any overdraft will be interest free. Customers will also not be charged for using their debit cards in ATM’s abroad, thus making it one of the cheaper accounts to use on holiday.

Marks and Spencer claim that the package of benefits that come with the accounts is worth up to £582 a year.

Kevin Mountford, head of banking at, a comparison website, said “fee paying accounts are now very much part of theUK’s financial landscape, but as with any paid for service, consumers need to consider if they will benefit from the add-ons”.

David Paine, Which? banking analyst, said “these packaged accounts will only be worth the monthly fee if you are a loyal M&S customer, who is likely to make use of most if not all, of the benefits”.

Therefore consumers will need to work out whether they will use the additional benefits as the Marks and Spencer deal only modestly compares with other packaged accounts.

The Financial Service Authority (FSA), states that “some consumers are being sold accounts that they may not need”, they have therefore made proposals to tighten up sales of these types of accounts.


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