The Government has announced plans to make the Post Office a “people’s bank”, offering financial products and acting as “the backbone” of a new national bank.
The proposals are going through a 3-month consultation period, after which the Government hopes that the Post Office will offer a useful banking channel mainly to those on low incomes, but also helping small businesses.
The Post Office already provides some savings and mortgages through its deal with the Bank of Ireland, and the Government has received some criticism for suggesting that this deal, which sees half of the profits disappear “abroad”, should continue under the new proposals.
That aside, the generalÂ consensusÂ is that it would be a beneficial service for low income families, especially those on benefits. One part of the proposal is for the Post Office to offer a weekly budgeting current account which should help people manage their finances more effectively. There’s alsoÂ plans for low income families to qualify for cheaper direct debit fuel tariffs and the reintroduction of children’sÂ savings account.
Under the plans, the Post Office would provide a special direct debit service, targeted mainly at people dependent on benefits. This would make it easier for them to get cheaper online services and tariffs for electricity and gas, rather than paying for more expensive pre-payment meters. The service would set aside a portion of the user’s benefits each week to make sure there was enough in the account at the end of the month to cover direct debit payments. The government also wants the Post Office to offer more services to small businesses and make it easier for first-time buyers to qualify for its mortgages.
The plans could also act to reinvigorate the humble Post Office which has taken a bit of a battering over the last few years. With many Post Office closures and the decline in the number of letters its sending, the Post Office needs to start bringing in new sources of business, otherwise we could see many more of the 11,000 branches shutting down.
Here’s a summary of the proposals announced by Dark Lord Mandelson:
- Current accounts accessible from any post office branch
- Children’s savings accounts
- Business accounts
- Weekly budgeting accounts that ring-fence a proportion of income each week to pay bills
- Closer links with credit unions
- Working to ensure that all bank current accounts can be accessed via the Post Office.
What do you think of these plans? Let us know in the comments below.
photo credit: David Masters
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