Tesco to open in-store banks

[Legal Beagles]

Tesco Bank, offering savings accounts, credit cards and insurance, set to open in 30 supermarket branches by the end of the year
Tesco shoppers will soon be able to apply for a credit card and buy insurance alongside their baked beans as the supermarket giant announced plans today to offer banking services within its stores.

Tesco Bank will appear in 30 branches of the group's stores by the end of the year following a pilot in Glasgow that has been running since 2006.

The first three branches will open next month in Brislington near Bristol, Blackpool and Coventry.

The bank will initially offer the existing range of Tesco personal finance products, which include insurance, credit cards and savings accounts, and it hopes to offer current accounts within the next 24 months.

Customers will also be able to compare the cost of financial products from Tesco and its competitors via in-store terminals that will host the supermarket's price comparison website Tescocompare.com.

The retailer is also considering offering a mortgage, according to reports in the Financial Times, but not when the bank launches. The company was quoted as saying the timing of a mortgage product would depend on "launching the right products at the right time, now not being it".

Tesco Personal Finance was half-owned by the Royal Bank of Scotland until last summer, when the supermarket giant bought up its share for £1bn.

It is already offering competitive personal loans and credit cards, and industry analysts believe a current account from the supermarket could really shake up the sector.

"Current accounts are a key product for a bank because they enable them to cross-sell other products very successfully," said David Black of financial information provider Defaqto. "It usually takes an age to get market share in current accounts but the supermarkets are in an ideal position to do this."

The reality of across-the-board paid-for current accounts is becoming more likely as the banks face the possibility of no longer being able to charge unauthorised overdraft fees as a result of an ongoing court battle with the Office of Fair Trading.

Black believes Tesco will be in a prime position to avoid this. "Tesco have the superb situation where they can say they won't charge if you spend x amount of money in their stores," he said. "The high-street banks should be very afraid."

• Banks and building societies
• Savings
• Current accounts
• Mortgages
• Consumer affairs
• Tesco
• Supermarkets

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[Amethyst]

Re: Tesco to open in-store banks

Bank account with your baked beans?

Tesco financial products might be cheap, but they're not always cheerful, says Jill Insley

Comments (1)
Tesco bank accounts: Can beans and coins really mix? Photograph: Sarah Lee/Roger Tooth

This morning, Tesco announced plans to get hold of the little money we don't spend with them by opening bank branches in 30 of its stores. On the face of it this should be good news for consumers: cheap insurance, cheap credit cards and cheap current accounts alongside Value baked beans and flour. But while Tesco clearly believes that every little helps, when it comes to core financial services I couldn't disagree more.
While some of the financial products that Tesco already offers through its website and DVD-type packages on sale in store might be cheap, a close look at the small print shows they are often far from being good value for money. Last year, I wrote in the Observer about a dangerously ill man left stranded in the Dominican Republic after he developed pneumonia, despite having bought Tesco travel insurance. The supermarket argued that because the man had a condition that predisposed him to developing the illness, he was disqualified from cover.
This might sound perfectly reasonable. However, the store that sold the man his travel policy had failed to make the information available at the point of sale that he needed to learn he would not qualify for cover. Tesco continued to deny liability, but eventually agreed to bring the man home and cover his costs. However, this experience encouraged me to look very carefully at its products. The travel policy, while very cheap, had a small print riddled with exclusions.
And for Tesco car insurance customers, cheap does not necessarily equate to cheerful. One comparison site says that while Tesco's standard motor policies, which like Churchill's and Virgin's are underwritten by UKI, are reasonably competitive and always in the top half of the best buy tables, it adds that its customers are not attracted by the "Value" Tesco car insurance, which strips out windscreen, stereo and replacement car cover. "That's not what people seem to want," it says.
Other Tesco financial products are not even that cheap. Its Bonus credit card, for instance, offers to repay one month's interest but charges a typical rate of 15.9% APR. Personally, if I were intending on not paying off my balance in full each month I would rather go for one which charged 0% interest on purchases for 10 months, such as the Marks and Spencer card. Or if I were transferring a balance I would apply for a card that charged 0% interest for the next 15 months, such as Abbey's or Virgin's.
Teco's website has also come under fire. A blogger writing under the name Iotanchee on Moneywise magazine's website in December complained about not being able to access his internet savers account (currently paying 1.75% gross) for two weeks. He said: "I have asked now to close down the account as I want to see my money at some point in the future. But despite it being an online account I have to send them notice in writing and they'll send me a cheque. Great."
Lotanchee's case might be a one off, but extended small print, lots of exclusions, uncompetitive products – it doesn't sound so different from the high street banks, does it? The idea of letting Tesco loose on my current account chills me to the bone. What about you?

[natweststaffmember]

Re: Tesco to open in-store banks

I have a tesco store application ready to go but the hours so far has not warranted me putting the application form in as yet. Still looking though